Wednesday, December 28, 2005

Hurricanes, Global Demand to blame for high gas prices

2005 saw gasoline prices hit historic highs. Mother nature and economics, not corporate profiteering, were to blame.

Check the prices at your nearest gas station and you may be tempted to think August and September of 2005 were just bad dreams.

The record-high gasoline prices that stunned Americans in the aftermath of summer's Gulf Coast hurricanes are gone. A gallon of regular, worth more than $3 mere months ago, now costs about $2.23 throughout California. That's only a little more than the $2.05 of one year ago.

But don't expect the relief to last. Energy analysts consider the current low prices an aberration, destined to disappear.

The plunge in gas prices represents a strange goodbye gift from hurricanes Katrina and Rita. After the storms smashed Gulf of Mexico oil wells and flooded coastal refineries, gasoline imports to the United States surged. We're still working through the glut. It will probably vanish in the new year.

Sooner or later, gasoline prices will probably rise to reflect the cost of crude oil, which stayed high after the hurricanes. Even the federal government, considered too optimistic by some analysts, expects oil prices to stay high or rise in 2006.

That doesn't mean a quick return of $3 gas. It does probably mean rising prices at the pump. The federal Energy Information Administration predicts a national average price of $2.41 for regular next year.