Prepare Yourself – Gas Prices To Increase Dramatically

The economy is finally showing some minor indications of coming back from the dead. It saw the white light and decided to stay with us! Alas, the world is all about balance. As the economy recovers, the bill is going to come due for certain events and one is going to be a massive increase in gas prices.

As you undoubtedly recall, oil prices went through the roof roughly a year ago. The cause? Well, one part was supply and a second part was certainly investors looking for a safe haven away from the degrading dollar. Regardless, the prices went up into the $140 range and higher figures were predicted. Of course, that didn’t occur. Instead, the housing bubble burst and the demand for fuel prices crashed into the $30 to $40 a barrel range. This, of course, drove prices at the pump down.

The efforts of the government to keep us out of a Great Depression Part 2 seem to be working. Although the massive debt incurred is staggering, the economy appears to be turning around and the latter part of 2009 could be a period of growth. Now the bad news. You can expect prices at the pump to go through the roof. Why? It all comes down to capitalism.

The core of capitalism is supply and demand. Well, guess what happened when the economy crashed? The demand for oil did as well. To prop up prices, the oil exporting companies from OPEC to Russia and beyond slashed production. Pumping of oil was stopped dead cold in more than a few areas. Put another way, the low demand was met with low supply.

What is going to happen as the economy ramps back up? Yep, you got it. Demand is going to skyrocket. Supply, however, will still be low. This will result in oil prices going through the roof until the supply and demand figures meet an equilibrium point. Where exactly that point is constitutes a very interesting question with no real answer. If you are an investor, however, now is a good time to be looking at oil stocks!

The economic nightmare of late 2008 and early 2009 is not over, but you can see the end from here. Make sure you are prepared for the coming changes when it starts bouncing back. Exploding fuel prices will undoubtedly be one of them.

By: Tom Ajava

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Thomas Ajava writes about gas history, facts and prices for HybridCarDealerDepot.com.