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The Economy and Gas Prices

According to the Bureau of Labor Statistics, the average price of a gallon of gas in the U.S. is nearly a dollar more now than it was ten years ago. But will the price roam above two dollars a gallon for good?

Dr. Barry Haworth

"It's gonna be awhile. I would think there's a possibility after the summer months of demand begins to fall and supply can catch up."

Dr. Barry Haworth of the University of Lousiville says peaks and drops in gas prices are to be expected. He's not surprised to see the price top two dollars a gallon.

Haworth continues

"Part of what happens is whether it's a more permanent increase or a temporary fluctuation. With oil prices, supply and demand drive prices up. Changes in supply and demand drive it back down."

Haworth says the surge past two dollars a gallon for regular unleaded gasoline in March and April would usually lead to a retreat of prices shortly thereafter. That won't be the case this time. Analysts indicate the demand for gasoline this summer will be up from a year ago, and higher than the five year average.

Haworth adds

"If you see peeking in May you would usually see a decrease coming after. But not too much this year because you head right into the summer months and that tends to push prices up again largely because of the demand."

Haworth adds that if companies forecast gas prices to stay high long-term, that could lead to an increase in prices for all goods and services that rely on gas for transportation.

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