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Department of Energy Forecasts Drop in Oil Prices

In light of weaker demand and more-than-adequate gasoline supplies, the Department of Energy is forecasting that prices at the pump will fall in 2013. If these predictions come true, then the national yearly average will decrease for the first time in the years.

However, there are some important caveats to keep in mind with this type of forecasting. The Huffington Post reports:

“Forecasters caution that they can’t predict other factors like Middle East tensions, refinery problems or hurricanes along the U.S. Gulf Coast – in other words, the same events that caused gasoline prices to spike in 2011 and 2012. Any or all of those troubles could crop up again in 2013 and push pump prices above last year’s record average of $3.63 a gallon.

The government expected gas to average about $3 during 2011. Then came the Arab Spring, which included the shutdown of Libya’s oil production. Oil prices shot up, and gasoline averaged $3.53 for the year. The government’s forecast for last year also turned out to be too low, by 18 cents per gallon.”

Considering the ongoing turmoil in Syria and Iran, uncertainty about consumer confidence, and of course the ever-present potential for natural disasters – perhaps it’s best to take these forecasts with a grain of salt.

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