Making predictions about the economy has been the thing to do as of late and energy prices are no exception. When the prediction is $4 gasoline, it should be taken seriously.
But like many other media gas price predictions, this one never came close.
CNBC’s Erin Burnett gave viewers that scary prediction during a January 2 appearance on the NBC “Nightly News.” The “Street Signs” anchor cited John Kilduff, the vice president of risk management at the MF Global Ltd. Brokerage, as the source of this predicted high watermark for gasoline.
“And John Kilduff, who I know you speak with often, as well, Brian, he says we could see prices at the pump as high as $4 a gallon,” Burnett said.“And that could be by the middle of February. So it could be anytime in the next six weeks. So that’s going to be an increase, and we've seen it across the board, Brian. Commodity prices are going up, and that is causing worry for stocks.”
Oil briefly went up to $100 a barrel early in January, but has since gone down to as low as $87 a barrel before rallying to over $98 a barrel on February 19. Gas prices never came close and have risen to $3.03, nearly $1 below the target.
Burnett explained her prediction would take time back in January because of the time lag with oil prices and gas prices.
“Well, Brian you said it right there,” Burnett said. “There is a lag time. It could take two weeks, it could take four weeks, but usually what happens to oil prices eventually happens to gasoline prices. And you can see right there, a year ago prices were trading at $2.32 a gallon. Now you’re going to pay $3.05.”
Burnett reiterated that prediction on January 3 on NBC’s “Today.”
“[A] lot of demand for oil,” Burnett said. “That fueled the increase to $100 a barrel. More money on energy means less money for everything else for American consumers. In terms of the pump, Natalie, two to four weeks is how long it takes for that oil price increase to actually affect people at the pump. And some do expect oil – gasoline prices to go to $4 a gallon by February.”
According to the Oil Price Information Service on February 19, the national average for gas was $3.03 a gallon. However, a refinery fire in
“Gasoline jumped as much as 1.3 percent yesterday after an explosion shut Alon USA Energy Inc.’s
That’s still nowhere near a $4-a-gallon price tag. But one expert explained this spike is more psychological than market-based.
"Refinery capacity is fairly tight and any kind of movement like this tends to impact the market more psychologically than in terms of supply and demand," said Bruce Bullock, director of the Maguire Energy Institute at Southern Methodist University.