Tuesday, March 29, 2011
Big 3 of Gas Prices: Hawaii, Alaska & California; Barclays Capital 2020 Oil Forecast Is Still $185
Today’s AAA Daily Fuel Gauge Report says the average statewide price of regular unleaded gas for Hawaii, Alaska and California is $4.223, $4.047 and $4.034 respectively.
These states are not the Final Three. More will join the $4/gallon club soon enough if the experts are right, even though the state in the number 4 position, Washington, currently trails far behind the top three at $3.777.
The above chart shows the 12-month trend in oil costs and the national average price of regular gas. Starting last August, there’s nearly a straight-line upward trend in the cost of oil.
With the summer driving season ahead and no let-up in the Middle East/North Africa drama, some analysts anticipate much higher oil prices to continue through this year. Barclays Capital just revised its forecast to an average of $112 per barrel, compared to its previous $91.
Higher Commuting Costs
Looking ahead to 2015, the company forecasts costs of $137/barrel for West Texas Intermediate crude and $135 for Brent crude. Unchanged is its forecast for 2020 -- $185 for WTI and $184 for Brent.
By 2020, Honolulu rail will be in operation. If the per-barrel cost of oil hits the projections, regular gas likely will cost more than $5.50/gallon using some rough calculations based on historic numbers when oil reached $147/barrel in 2008 (see chart).
What the cost of a transit pass will be in 2020 is unknown; the City council will make those decisions. Adults buy one for $60 today, and even if the cost increased by 50 percent (that’s an uninformed “for-example”), the cost of taking rail/bus transit would be far far less than the cost of gasoline alone.
Add the car-related expense of parking, maintenance and insurance and the difference between commuting by car and transit will be huge.
Car commuters become transit commuters for two reasons – cost and convenience. The anti-railers’ prediction that “nobody will ride” is inconceivable based on cost alone if the price of oil reaches the levels predicted by expert analysts.
When the convenience of no-congestion commuting is added to the decision, rail’s success in providing an alternative to driving is assured.