We love it when experts make predictions. They almost always turn out to be wrong.
Well, that one was easy.
And we couldn’t find any instances of economists’ predictions good or bad, but suspect that economists are smart enough to hedge six ways to Sunday, so no one can come back and point to their mistake(s).
Just out today, there’s a good one. The American Automobile Association (AAA) predicted the national average price for gasoline “will remain above $3.00 per gallon for at least another thousand days barring a major economic recession.” Yes, there’s a bit of hedging, but still…
Bob Darbelnet, President and CEO of AAA, actually got out onto a limb in the press release, saying, “The reality is that expensive gas is here to stay, …”
But IFO believes it is possible for gas prices to go below that amount in fairly short order, even absent an economic downturn, especially if the fed govt allows more drilling for oil. In the meantime, we are producing huge amounts of natural gas which can substitute for some petroleum uses, thus reducing demand pressure on oil.
There’s weird stuff happening with traffic, too. We listen to morning drive time radio every day. The traffic seems to have gotten worse in just the past few months. More minor accidents. More traffic jams for unknown reasons.
Are people driving less? Maybe they mainly go out on the roads to get to and from work and thus are sleepy in the morning and tired at night. Certainly, gas mileage is getting better. The state gas tax collectors are crying about that when they ask their legislatures for increases in the tax.
Here in Oregon, some people blame the fact that the rains just started up again for the terrible traffic, but it seems to IFO that there is more to it.
Hint to investors: check out energy industry reports on various sources of fuel. You may find an interesting company or two ready to break out of the pack, due to a change in supply of their product or their competitors’ products.