2012 – Possibly the Year with the Highest Gasoline Prices

Prices at the pump are sharply higher on increasing crude oil prices and refinery problems and may possibly mark this year as the period with the most expensive gasoline prices yet seen.

The nationwide average of the current gasoline price is $3.70 per gallon, a 30-cent rise since mid-July and a higher level compared to the past year in almost 39 states.

The high gas prices today may possibly keep on climbing until August with only slight relief until Labor Day ends.

The fast, month-long, 9 percent increase in current gasoline prices has raised this year’s average to $3.61 per gallon versus last year’s $3.51 per gallon, itself considered the most costly year ever for drivers. Even as demand is anticipated to decrease following the ‘summer driving season,’ this year will surpass the price last year, said Brian Milne of Telvent DTN.

The run-up happens at a period when prices have usually reached their highest level for the year and only weeks following a recent period which saw dropping demand and slowing global economic growth. The trend had signaled several experts in the industry to project gasoline prices at $3 per gallon by autumn. Milne anticipates gas prices to reach around $3.90 before they start falling in September.

Midwest drivers are already spending a lot. Fallout caused by production reductions at four refineries in Illinois has led the regional current gasoline prices to at least $4 per gallon in certain locations. Meanwhile, pump prices in the West Coast gained 40 cents per gallon since the fire last week at Chevron’s refinery in Northern California.

Bank of the West’s chief economist, Mr. Scott Anderson, said that if the prices keep on rising, they could stop the bounce back of consumer spending. A recent report from the Commerce Department shows that consumer spending in the month of July moved up by its highest five-month gain of 0.8%.

Michael Green, a spokesman for AAA, said that the majority of consumers have already finalized their summer vacation plans and are not likely to cancel trips. Businesses that are already used to high gasoline price increases are hastening plans to cut fuel costs.

By: Chris Termeer

Chris Termeer

Chris Termeer is an oil and gas consultant, industry commentator and analyst. His book, Fundamentals of Investing in Oil and Gas provides a comprehensive overview of all aspects of the oil and gas industry, including exploration, drilling, production, storage, transportation and refining, to name but a few.

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