Gas Prices Will Rise to $3.00 per Gallon in 2010
Gas prices will once again surge to uncomfortable levels in 2010. In 2008, gas prices hit record levels near $4.00 per gallon, which ignited a stock market selloff that intensified when the banks nearly collapsed later that year. Gas prices stabilized during the 2009 bull market run, but prices are ready to move higher once again. Using technical analysis on the United States Oil exchange traded fund suggest that prices will move about 20% higher during the Spring of 2010.
Gas prices surged to record levels in 2008, and American consumers felt the pinch in their wallets. They peaked that year near a national average of $4.00 per gallon, and Americans had to severely cut back on spending in order to fuel their vehicles. Americans were strapped with bills, maxed out on credit cards, and extremely high gas prices was the final nail in the coffin for consumers.
During the huge bull market rally of 2009, gas prices managed to stabilize. For the better part of the year, gas prices fluctuated between $2.00 and $2.50 per gallon. Although prices have consolidated at more reasonable levels, the chart of the oil ETF has formed a bullish technical pattern that will send prices much higher in 2010.
Using technical analysis, and looking at a weekly chart of the United States Oil ETF, symbol USO, it is clear that an ascending triangle has been forming over the past year. Once prices break above the upper boundary at $40, they will surge to the $48-$50 level. Accordingly, gas prices will rise about 20% to a national average near $3.00 per gallon. Charts and technical analysis aside, gas prices generally move higher during the Spring and Summer driving season which was the case in 2008 as well.
High gas prices will once again send consumers into financial distress in 2010. Gas prices at $3.00 per gallon are much lower than the record prices in 2008, but consumers are in much worse shape after the recent financial collapse. Also, consider the fact that the unemployment rate remains near the 10% level, and you can see that consumers are much more fragile than they were a few years ago. Considering the stock market is forward looking, it will correct accordingly and move to lower levels in 2010 as consumers further cut back on spending to pay for rising gas prices.