Monday, January 1, 2024, 3PM: Happy New Year! Looking back on my New Year’s Day post a year ago, I marveled at the drama of 2022. However 2023, as we noted last month, was a pleasant surprise of a normal year, and we ended the year under $3 a gallon across the board. This afternoon, you can find gas around $2.65 a gallon in west Michigan, if you know where to look.
So, what do we have to keep in mind when it comes to gas prices in the first part of 2024? The annual step up in the Michigan gas tax is now in effect, going from 28.6 cents a gallon last year to 30 cents even today. The world events that have had the biggest effect on gas prices the last few years — wars and the ups-and-downs of a pandemic — seem to have been absorbed by the markets that set energy prices. And if we are back to normal, so to speak, then December usually marks the low for the year, so starting today, there should be a bias towards higher prices for several months. I don’t know if the mild winter so far (at least in Michigan) will moderate that bias, but we will pay attention.
If the retailers don’t like the aesthetics of prices in a range of more than 30 cents right now, they could use the excuse of the 1.4 cent jump in the gas tax to reset prices to the $2.89-$2.99 range this week. But I don’t see any urgent need for them to do so, given where wholesale prices are this holiday weekend. So, no prediction to start the year.
New Year’s Day bonus: Here’s a chart of oil prices, adjusted for inflation, going back to the 1940’s. We are sitting in the wide range that was established in the 1970’s, but note the oil shock in 1974 that the market has never given back. -EA