How low can gasoline prices go?

So just how low can pump prices go? On that question, analysts are all over the map. But they agree on one point: Gasoline prices aren’t likely prices to fall back below $2 a gallon unless the price of the crude oil from which it’s made also drops significantly.

“It’s difficult to really make a strong compelling case for crude price to drop unless A, you have a recession or B, you have peace, love and happiness break out in all of these chaotic portions of the globe,” said Kloza.

Major oil producers like like Iran and Venezuela have made clear they want to prevent crude prices from falling. And oil production in Iraq, and to a lesser extent Nigeria, has been slowed by violence and insurgent attacks.

“We’re going to need some of the uncertainty in the oil-producing countries to be rectified (before oil prices fall),” said Kilduff.

But over the longer term, some analysts believe that the high price of crude oil is having the effect that economics textbooks predict it should: spurring development of new oil supplies. Recent test wells in deepwater Gulf of Mexico — from holes drilled through five miles of rock at sea depths of over 9,000 feet — have raised hopes of the biggest U.S. oil discovery since the Alaskan North Slope in the 1970s.

“This is going to be going on all over the planet,” said Beutel. “At $70 a barrel you could probably find oil in your own back yard. You’d just have to dig awfully deep.”

Beutel says that over the next five years or so increased drilling activity worldwide could send oil prices crashing — and pump prices as low as $1 a gallon in some parts of the country.

But that forecast is on the optimistic end of the range. While consumers may once again see pump prices below $2 a gallon, most analysts expect pump prices to remain volatile.

“My bet is that the market is going to continue to be extraordinarily bipolar,” said Kloza. “And the difference between the lowest price you pay in any calendar year is going to be more than a dollar. And that could mean $1.75 to $3.50.”

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