Gas prices have peaked, for now

With the qualifier that six months is a long time in the energy markets, and 18 months is an eternity, does the new thesis regarding the relationship between U.S. oil consumption and oil's price bode well for gasoline's price, and for U.S. consumers? Economist Glen Langan told BloggingStocks that he thinks it does.

"Near-term, gasoline prices peaked in late June/early July and are likely to trend lower at least through the year, provided U.S. oil and gasoline consumption continue to decline, which I think they will," Langan said. The average U.S. price for regular unleaded gasoline peaked at about $4.05 per gallon during June/July, with many high-cost regions experiencing prices well above that average. Prices have dropped about 30 cents since that time, and "are likely to drop another 20-30 cents by late January 2008," Langan predicted, on belt-tightening by consumers and businesses, and seasonally lower gasoline demand in the fall/winter.

Still, Langan is careful to point out that the decline in gasoline prices will be "near-term" -- in other words, not something that's likely to endure for years and years.

"The gasoline price decline for the next six months represents a reprieve," Langan said. "It could extend through 2009 if both the U.S. and global economies remain sluggish and U.S. consumers continue to make more-efficient choices with their vehicles. But that doesn't blot-out oil's long-term fundamentals, which still point to a resumption of price increases by 2010."

Oil/Gasoline Analysis: Prudent advise for consumers and business executives alike: the dip in oil/gasoline prices represent a temporary reprieve -- one that should not deflect U.S. users from becoming more energy efficient on all fronts (transportation, business/home heating, industrial). A failure to do so would create an even greater energy price drag on the U.S. economy than the contraction that occurred in 2008.