Summertime, and the livin' is easy, wrote Ira Gershwin and Du Bose Heyward in 1933. The current gasoline prices are not easy on the budget because they are rising again. According to the New York Times of 8 June 2009: "Gas prices have risen 41 days in a row, to a national average of almost $2.62 a gallon. That is a sharp increase from the low of $1.62 a gallon that prevailed at the end of last year."

Then, on 9 July
2009, again the New York Times: "Oil prices briefly fell under $60 a barrel on Thursday after nearly two weeks of uninterrupted declines, as traders and investors acknowledged that a global economic recovery would take longer than hoped."

What is really going on in the price of the black gold, oil? Here is what I found for the world nominal oil price data from 1970 to March 2009 in a graph.
Note: The price data above are in nominal terms, i.e., they are in "dollars-of-the-day" and have not been adjusted for inflation. Credit: Short Term Energy Outlook Webpage 

What is the most interesting is the trend in the oil price under the influence of major events such as Arab Oil Embargo or Hurricanes Ivan, Dennis, Katrina, and Rita in the Gulf of Mexico. The Asian Economic Crisis in 1999 brought down the price to a mere $10, which was the price when the Arab Oil Embargo started in 1974. However, when you take into account inflation there is a different story.

The New York Times article of 9 July 2009 also read: "Strong demand for oil, coupled with weak growth in supplies over the last decade, propelled oil to a record of $145.29 a barrel last year. The price bubble burst when the global economy plunged into a recession and industrial activity worldwide slowed sharply last year. That shaved the global demand for oil and pushed prices down to a low of $33 a barrel in December."

Indeed I could confirm relevant data for further analysis. When oil prices are adjusted for inflation in March 2009 dollars, the following crossovers occur around $33. The numbers in parantheses are the unadjusted prices.

12/73    23.94 (5.18)
01/74    53.96 (11.65)
04/87    33.69 (17.89)
04/89    33.75 (19.59)
12/89    33.64 (20.05)
05/00    32.61 /26.35)
03/03    33.78 (28.23)
12/03    32.74 (28.63)
01/09    33.88 (34.00)
02/09    32.99 (33.00)
03/09    33.00 (33.00)

The inflation adjusted values above show that $33 has been the real price at various times since 1973. These oil price fluctuations are obviously reflected in the gas prices we pay at the pump. Here is a chart of both Real Price* and Nominal Price for gasoline at the pump. 
Real Gasoline Pump Price Chart 

This chart covers both real and nominal prices since 1919. How do you like paying these days the same real price of 1919? Because that is what we read from the chart. You also find projections for the rest of 2009. Now we come to the short term energy outlook. The Energy Information Administration (EIA) of The U.S. Department Of Energy released on 7 July 2009 these highlights.

== After climbing for much of the year, the spot price of West Texas Intermediate (WTI) crude oil hovered around $70 per barrel through most of June.  The price of WTI crude oil is expected to average near $70 per barrel through the second half of 2009, an increase of about $18 compared with the average for the first half of the year.  The WTI spot price is projected to rise slowly as economic conditions improve, and to average about $72 per barrel in 2010.

== U.S average prices for regular-grade gasoline, which reached $2.69 per gallon in EIA's June 22 weekly survey, have fallen back slightly.  Gasoline prices are expected to stay near current levels but will be strongly influenced by any changes in crude oil prices.  The annual average regular-grade gasoline retail price in 2009 is expected to be $2.36 per gallon.  Higher projected crude oil prices next year are expected to boost the average price to $2.69 per gallon in 2010.  Annual average diesel fuel retail prices are expected to be $2.46 and $2.79 per gallon in 2009 and 2010, respectively.

So to repeat the EIA's good news, the gas prices are expected to stay near the current levels unless ... Regardless.. let's enjoy our times.
* Real Price Calculation Procedure is given by this equation:
Real Price in Month A = Nominal Price in Month A x (Consumer Price Index in Base Month / Consumer Price Index in Month A).