Prices of gasoline depend upon two factors, according to the U.S. government. They are Chinese efforts to control its growth and inflation rate by investing in U.S. Treasury bonds, and OPEC intentions regarding production increases as the global economy exhibits recovery.
Because West Texas Intermediate Crude oil is expected to average about $93 per barrel in 2011, $14 higher than average prices last year, gasoline is predicted to average $3.17 per gallon.
Using a complex system of calculation, the U.S. Energy Information Administration bases the prediction on an assumption that U.S. real gross domestic product will grow 2.2 percent in 2011 and 2.9 percent in 2012. World GDP, weighted by oil consumption, will grow about 3.3 percent and 3.7 percent in 2011 and 2012.
“There is also significant uncertainty surrounding the forecast, with the current market prices of futures and options contracts for gasoline suggesting more than a 25percent probability that the national average retail price for regular gasoline could exceed $3.50 per gallon in the June through September period in 2011 and an 8 to 10 percent probability that it could $4.00 per gallon in August and September 2011,” according to an estimate published in mid-month by the government agency.
There are certain trepidations in the world financial community regarding China's efforts to address its growth and inflation rates, and “unforeseen production issues.”
“Should OPEC not increase production as global consumption recovers, oil prices could be significantly higher than the central forecast. The rate of economic recovery, both domestically and globally, also remains uncertain due to a variety of factors including fiscal issues facing national and sub-national governments.”
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