The glut of new oil supply in North America could mean that gas prices will go easy on your wallet for the forseeable future.
All indications suggest we’ll see prices at the pump drop as much as 50 cents off and on over the next five years. Recent predictions in Barron’s magazine said that the price per barrel would fluctuate over the next 5 years lower and higher than $75, but that $75 is the likely average giving us much cheaper gas prices on average. That would be down roughly 25% from today’s barrel prices of $100 to $105 a barrel.
Of course, there’s a caveat here. This is without factoring in any possible threats from natural disaster or terrorism.
Meanwhile, what’s this oversupply of oil all about? Well, it’s because of all the hydraulic fracking and new computer-aided technology to discover highly productive fields to produce oil and natural gas throughout Canada and the United States.
But predicting gas prices — even in the face of such great supplies — can be a dangerous game.
Consider this: A couple of years ago, Barron’s magazine predicted that oil prices could hit $150/barrel during 2012. That would have put the price at the pump between $4.50/gallon and $5.25/gallon! We all know we never saw that.
Then several years before that, another Forbes cover story predicted a collapse in oil prices. The funny thing is that story ran not long before the huge run-up to $147/barrel in 2008, which saw us paying $4.11/gallon at the pump as a national average.
My point is that even bright industry insiders can be wrong. But here’s hoping they are right this time!
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