Gas has settled around $3.40 a gallon, though experts say it's hard to predict the future. The gas-price crisis that wasn't

Remember the $6 we were all supposed to be paying for a gallon of gasoline about now?

It didn’t happen, despite the dramatic predictions from armchair pundits, political candidates and some in the media.


Instead, gasoline has settled around $3.40 a gallon as of Monday — rising for the moment, although perhaps nearing what some fuel-price experts consider a plateau of sorts. But credible analysts concede that too many variables are at play for any certainty.

“The real truth is no one really knows. There’s so many unknowables,” said Guy Caruso, former head of the U.S. Energy Information Administration under President George W. Bush.

Among the complex ingredients are possible future conflicts in the Middle East or a global economic crisis, as well as the strength of the U.S. dollar and oil production by Saudi Arabia.

As for who’s to blame for hyping past gas price predictions, “I always hate to start saying it’s someone’s fault or some conspiracy theory,” Caruso said. “There is this little bit of a herd instinct that we are guilty of.”

The nuances of price trends can get lost sometimes when politicians, the media and even some analysts weigh in.

“It’s a gravitation towards some of the more outlying predictions than I would argue toward the more realistic predictions,” said Avery Ash, AAA’s manager of regulatory affairs.

Republicans were quick to jump on the issue earlier this year, when steadily rising prices made $4 a gallon seem plausible — and led to speculation that $5 or $6 was in sight. They said this called for action, including more drilling and approval of the Keystone XL pipeline from Canada.

“This debate is a debate we want to have,” House Speaker John Boehner told fellow Republicans in February, citing ABC News’s predictions of $4 gasoline by summer. (The national average was $3.52 at the time.) “Certainly, this summer will see the highest gas prices in years.”

In April, the Drudge Report linked to a report from a CBS affiliate in Chicago that said “some experts say $5 per gallon gas is possible by Memorial Day — or sometime in summer.” And conservative pundit Pat Buchanan prognosticated that even worse was on the way, saying that with a possible conflict with Iran brewing, “I think that definitely prices could be up at $6 a gallon,” and that “it’s going to be the principal issue in the fall election.”

Forbes contributor Rick Ungar offered a similar speculation, writing in February that “at this point in our election process, there appears little question that one of the most significant challenges to an Obama reelection is the threat of Americans having to drive to the polls this November in automobiles powered by $6 a gallon gasoline.”

And some people didn’t even wait for the worst to happen: PolitiFact gave Ron Paul a “pants on fire” rating in February for claiming that gasoline had “hit $6 a gallon in Florida.” (It had, but only at two tourist-trap gas stations near the Orlando airport.)

Even some Democrats jumped on the gas price bandwagon, using the pain at the pump to demonize market speculation or urge Obama to tap the Strategic Petroleum Reserve.

More recently, a USA Today story in June, citing rising inventories and some experts’ predictions of a bearish economy, fueled hopes that the price could drop below $3 a gallon by fall — just in time for the election.

Dramatic swings in gas prices do happen, of course — witness what happened four years ago, when prices peaked at a record $4.11 a gallon only to plummet by the end of the year amid the global financial meltdown.

The headlines proclaiming $5- or $6-a-gallon gasoline represented “a juicier story because people freak out when they see that,” said Patrick DeHaan, a senior petroleum analyst at GasBuddy.com. “Whatever analyst has the most wild prediction is going to win the battle. So it’s not necessarily the best info that’s out there.”

To be fair, some publications made clear they were focusing narrowly on local, rather than nationwide, prices, and even the government’s EIA has received criticism over the years for not being terribly accurate with its forecasting.

The reality remains what it has been for a while now: the volatility of the global economy and an active hurricane season — coupled now with Iranian tensions and sanctions — and the mysteries of how the markets will respond.

“Realistically, we’re not doing anybody a favor by making a hard and fast prediction for this fall, for the end of the year,” Ash said.

Ash said that, unlike predictions for $5-a-gallon gasoline early this year, predictions of $3 a gallon or so by the end of the year aren’t far-fetched.

“We do typically see that decline in prices post-Labor Day,” he said, thanks to the usual seasonal trend of lower demand after the summer driving season and a global economy still struggling to get completely upright. “It’s reasonable for somebody to say that,” he added. “We’re not saying it’s likely; we’re certainly not saying it’s definite.”

AAA is reporting a nationwide average regular gasoline price Monday at $3.40 a gallon, the third highest for that day in history. Prices at the pump have now gone up 13 of the past 14 days after declining for 75 of the prior 77 days and remain lower than they were a year ago, according to AAA.

It’s worth noting that the general rule of thumb is every $1 change in crude oil prices results in a 2.5-cent change in gasoline prices.

So higher gasoline prices now were inevitable after crude oil prices leapt from $77 to $84 a barrel on June 29 on positive economic news out of Europe — and have since remained relatively stable at around $87 a barrel.

What does appear more certain is that American consumers have gotten used to higher prices at the pump. A look at EIA data shows that weekly average retail gasoline prices have been above $2.50 a gallon for about 80 percent of the time since January 2006 — as opposed to just about 1 percent of the time from 1990 to 2005.

The nationwide average has stayed above $3 a gallon since late December 2010.

“We are dealing with higher prices on a pretty consistent basis now,” Ash said. “Over $3 a gallon has become the norm for a lot of people.”