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If current trends in the price of gas continue, get ready to go on an expedition to find some cash to fill up your Expedition's gas tank.
According to Bloomberg, analysts are saying that gas prices may hit the $4 per gallon mark in the U.S. this summer, especially if a natural disaster (such as a hurricane) affects refinery production along the Gulf Coast. That could make the fill-up for a Ford Expedition cost as much as $130.
"Hurricanes are always the huge wild card," said Peter Beutel, an analyst at Cameron Hanover Inc. in Stamford, Conn." We're all praying for a year like 2006 rather than 2005.
Yet Tropical Storm Watch, a British-based firms, forecasts that the continental U.S. may experience as many as 17 tropical storms this year, of which as many as nine storms could become hurricanes while four of those could be considered major hurricanes.
But refineries are the crucial link in all of this. If nothing bad happens to them this summer, then gasoline prices may creep up, although not the $4 level. However, that's a big if, says Philip K. Verleger, a Newport Beach, Calif.-base economist. "It's almost impossible we'll get to $4 a gallon if all the refineries run well this summer," the California economist states. "But if something happens and there are problems, then anything's possible."
And it's that "if" that has retailers nervous, especially the automakers. Rising pump prices also affect the overall inflation rate in the economy. Whereas $4-a-gallon gasoline would only raise the price of a 12-gallon tank of gas for a hybrid-engined car, such as the Toyota Prius, by $10, the same increase to $4 per gallon would affect a Ford Expedition driver by $40 (which is the extra cost incurred in filling up a 34-gallon tank with the newly-expensive fuel). And which type of car do you think is more prevalent in the marketplace? The Ford Expedition, and its other large SUV cousins.
Our take? Wait until $4 a gallon is the standard price for regular. Any takers it'll be $5 by decades end?
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