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Gas Prices Drop After 4 Weeks: Will It Last?

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  • NYMEX
    (PHOTO: Reuters)
    Traders gesture at each other while working in the crude oil and natural gas options pit on the floor of the New York Mercantile Exchange on March 7, 2011.
By Daniel Distant, Christian Post Reporter
March 7, 2012|8:27 am

Gas prices have dropped slightly for the first time following a four week steady rise, according to reports.

The gas price drop may not last for long, however.

Gas prices managed to fall by less than a penny Tuesday to $3.764 a gallon. The previous price, $3.77 a gallon, was the result of a 27-day hike that started Feb. 8 and continued, worrying middle-class Americans who were being forced to pay more at the pumps.

Gas rose by over 28 cents - an average of about a penny a day, according to AAA's Daily Fuel Gauge Report. The slight relief could be the cause of crude oil prices, which also fell to about their lowest price in two weeks.

The relief could last through this week. Oil, which is a good indicator for gas prices, should show "flat choppy prices through the week," Tom Kloza, chief oil analyst at the Oil Price Information Service, told Newscore.

While the short term outlook on gas prices looks favorable, the long term is hotly debated. Some see gas shooting to much higher prices, while some think that $5-per-gallon gas is virtually impossible.

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"I still believe in my heart of hearts that $4.50-$5 a gallon prices are bunk, hyperbole, or a pipe dream for some investors," said Kloza. "I am maintaining my view that the national average peaks at between $3.75 and $4.25 a gallon."

While this seems like good news, gas is almost at $4 a gallon in New York, Oregon, Washington, and Illinois. Some states have already reached that far, like California, Alaska and Hawaii.

 Still, many oil experts say $5 a gallon just won't happen.

"We're probably not going to hit $5 a gallon," Phil Flynn, an oil analyst, told FOX Business Network. "If the worst-case scenario doesn't happen we're going to a bunch of oil sitting around in tankers that will put significant downward pressure on prices."

The "worst-case scenario" to which Flynn refers is the conflict surrounding Iran. For Flynn, the tension between Iran and Israel is driving up gas prices, so if it is resolved, "prices really fall" - possibly to under $3 a gallon.

 

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