Gas Prices Will Continue to Rise

According to the Energy Information Administration (Official Energy Statistics from the U.S. Government), gas prices are predicted to keep on rising, at least for the short term. According to their latest reports (found via ABG), retail prices are expected to stay over $3 per gallon in 2008 and 2009, with average prices peaking near $3.50 per gallon this spring. Of course, it varies by region.

Table 4c. U.S. Regional Motor Gasoline Prices and Inventories
	2005	2006	2007	2008	2009
Prices (cents per gallon)
Refiner Wholesale Price	167	197	219	251	240
Gasoline Regular Grade Retail Prices Excluding Taxes
PADD 1 (East Coast)	179	208	227	262	250
PADD 2 (Midwest)	177	206	232	263	251
PADD 3 (Gulf Coast)	177	206	226	259	247
PADD 4 (Rockt Mountain)	181	210	234	265	254
PADD 5 (West Coast)	193	223	242	278	267
U.S. Average	180	210	231	265	253
Gasoline Regular Grade Retail Prices Including Taxes
PADD 1	227	258	277	314	302
PADD 2	222	252	280	310	298
PADD 3	219	248	268	303	291
PADD 4	226	256	281	311	301
PADD 5	244	276	301	332	321
U.S. Average	227	258	281	314	303
Gasoline All Grades U.S. Average Retail Price Including Taxes	231	262	285	319	307

Crude Oil Predictions
Despite the rising cost in retail prices, the EIA is also predicting a lower cost per barrel: WTI crude oil prices averaged $66.02 per barrel in 2006 and $72.30 per barrel in 2007. WTI prices are projected to average about $87 and $82 per barrel, respectively, in 2008 and 2009.

The EIA is also predicting a rise in motor gasoline consumption (0.8 percent in 2008 and 1.0 percent in 2009) as the driving-age population grows and the ethanol share of the gasoline pool increases.

Renewable Fuel Predictions for 2008 and 2009
The Energy Independence and Security Act of 2007 mandates that transportation fuels sold in the United States must contain at least 9.0 billion gallons of renewable fuels in 2008 and 11.1 billion gallons in 2009. The 2008 renewable fuels mandate is projected to be exceeded, with domestic ethanol production increasing from a projected total of 6.5 billion gallons in 2007 to about 8.5 billion gallons in 2008. Ethanol imports and biodiesel should add about 0.5 and 1.2 billion gallons, respectively, to the 2008 renewable fuel volumes. Although domestic ethanol production capacity is expected to increase from the current level of 7.4 billion gallons per year to about 13 billion gallons per year in 2009, ethanol transportation and distribution infrastructure constraints and State gasoline product quality regulations, which inhibit ethanol blending, are expected to slow market penetration and thus restrain production growth.

What this Means for Hybrid Cars
The relationship between hybrid car sales and gas prices is as obvious as it is true. So, as gas prices continue to rise, so will hybrid car sales. I expect more studies to start coming out letting people know they can save money (in the long term) by buying a hybrid car.