Analysis of gas price trend

The EIA's analysis this week:

"the bottoming of the gasoline market in early winter, with very low or even negative margins between gasoline and crude oil prices, led refiners to bring forward maintenance activity and cut their operating rates to minimize surplus inventories. At the same time, those prices were low enough to generate a rebound in demand, even as the economy struggled.

Along with rising crude prices, the tighter balance between supply and demand in the gasoline market brought retail gasoline prices from the mid $1.60s to above $2 per gallon. Retail gasoline prices approaching $3 per gallon, however, are probably not reachable, let alone sustainable, this summer due to continuing surplus refining capacity and the continuing effect of the economic downturn on fuel demand.

Furthermore, with over 4 million barrels per day of excess crude oil production capacity, any surge in demand on a recovering economy could be met by increased production, mainly from OPEC countries. So, while gasoline consumers may be irked at paying over $2 per gallon for much of this summer, it doesn't look like 2009 will produce a spike in prices that comes anywhere close to what occurred last summer."

Adjusted for inflation, $2 per gallon is still a fairly low price for gasoline.