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Savor Cheap Gas Prices While You Can

NEW YORK ( TheStreet) -- Memorial Day has come and gone, signaling the start of the summer -- and the summer driving season. After the wild gyrations of the crude oil market this spring, what should we expect for gas prices? The outlook actually looks pretty good for the next several months.

Summer brings thoughts of vacations with the family in the car, and that means that gas prices are a big part of those plans. There's been a big run-up in gas prices over the past year, from an average price of $2.76 last Memorial day to $3.81 yesterday.

Gas prices are dependent upon crude oil prices, the stuff that is refined to make gasoline, and crude was affected by a variety of forces in the past 12 months but particularly by the supply threats of Mideast revolutions in Egypt and Tunisia and ongoing strife in Bahrain, Yemen and Syria. Gas itself staged a price resurgence, and margins for refining gasoline have seen their best year since 2006, also driving up the price.

But after Brent crude traded in London surged to close to $125 a barrel last month, bringing national average gas prices close to $4 a gallon, prices have moderated somewhat.

Demand is down here in the United States as people are responding to the high prices in the only way they can: driving less. The uprisings in the Middle East, while not in any way finished, have seemed to quiet down a bit. And big crude oil traders have taken some profits out of the temporarily overheated crude price and may be looking, with the upcoming uncertainty of the end of the Federal Reserve's QE2 program, to take a break from flooding the crude market in the next two months with churning volatility.

It takes several weeks normally for prices in the futures markets to find their way out to the streets for consumers, but crude's recent $15 fall should translate into an almost 40-cent retreat in the price of gas at the pumps. Indeed, the national average price for gas is down another 8 cents in the past week alone. If crude oil can continue to trade here, with the West Texas Intermediate price that is traded at the NYMEX in New York hovering closer to $100 a barrel or lower, the national average for gasoline should steadily drop at least another 20 to 25 cents a gallon.
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