Gas at the Pump $5 by End of 2008?

Jun 10, 2008: 5:00 PM CST

What are the odds that the average cost of a gallon of gas at the pump will cost $5.00? While that’s hard to discern now, a solid 86% of Americans in a CNN poll released today said that possibility was at least somewhat likely.

Here are some key quotes from the Washington Post article “Fuel Prices Challenge Cars’ Reign:

“… cash-strapped Americans are changing vacation plans, consolidating errands, and turning to carpools and mass transit.”

“… with crude oil trading at more than $134 a barrel yesterday, more gasoline price increases are probably in the pipeline as refiners and retailers attempt to pass crude oil costs along to motorists, industry analysts warn.”

There are seen and unforeseen effects:

“In a society nurtured on cheap gasoline, the high fuel prices are having disparate effects: the end of free pizza deliveries at major franchises, a plunge in the sales of sport-utility vehicles, a steep drop in the price of houses that are far from jobs or mass transit.”

Interestingly enough, the major airlines currently have done an about-face:

“The biggest U.S. airlines, squeezed by massive fuel costs, imposed domestic fare increases over the weekend, only to roll them back yesterday to avoid losing passengers.”

The authors put the situation in daily, easy to understand monetary terms:

“The cost of the 44-mile round trip between Fairfax City and downtown Washington has risen to $8.93 a day from $6.78 last year for a commuter driving a car with average fuel efficiency.”

It takes roughly $9.00 per day just to get to and from work if your commute is around 100 miles, which is a reality for many Americans.

Finally, here’s a quick look at the daily price of crude oil prices (futures) per barrel:

We will continue to watch this situation very closely, and what it may mean for specific sectors, and the broader economy in general.

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