The Rising Price of GasolineThis graph shows the average price of gasoline from 1990 to 2/20/12. Thisis a large data set that you can download from this site: http://www.eia.gov/petroleum/gasdiesel/
The Rising Price of GasolineNotice that there was a previous spike in the price of gasoline in 2008,which led to a steep drop in price. Currently, we are on the upswing in pricesince that downward spike.
The Rising Price of GasolineThere is an overall linear regression that could be performed on this largedata set. But such a linear model would not capture some of the near-termchanges in price.
The Rising Price of GasolineInstead, it makes more sense to look at a linear regression for this part ofthe overall data set.
The Rising Price of GasolineHere is the graph of this portion of the data, which covers the period from2008 (when the gas dipped to its lowest) to the present.
The Rising Price of GasolineThis will result in a better line of best fit.
The Rising Price of GasolineRunning a linear regression on this data set results in this equation for theline of best fit.
The Rising Price of GasolineUsing the equation, we can find the estimated time when the price ofgasoline will, on average, be $5.
The Rising Price of GasolineAccording to this regression, it would take till 2015 for that to happen. Butgiven current pricing trends, that date is too far off.
The Rising Price of GasolineThe most recent data shows a bigger spike than the overall trend. Thisportion of the data takes us to 2010, and perhaps a linear regression onthis portion of the data will yield a better estimate.
The Rising Price of GasolineThe newer regression curve does, indeed, show gas approaching $5 at afaster rate.
The Rising Price of GasolineWith this regression curve, the price of gasoline will reach $5 by the end ofthis year, into early 2013.
The Rising Price of GasolineWhen do you think the price of gas will reach $5 per gallon in your area?When do you think the average for the country will be $5 per gallon?