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I checked my calendar- 2011 is officially over, and none to soon, but could 2011 be a harbinger to what's to come in 2012? I hate to even bring it up, but Gregg Laskoski and I are finishing our collaboration over gasoline price projections for 2012, and with Iran talking about closing the Strait of Hormuz, I'm worried.
First things first- how bad was 2011 for your wallet? Rough. 2011 closed out as the highest yearly average ever for motor gasoline- $3.513, a whopping 72.6-cents per gallon higher than the average price for 2010. Ick! That means for the average American, you spent over $400 more for gasoline in 2011 than 2010. Now to think where else you could have spent that $400+ than at the pump! You could have bought an iPad (maybe you did!), a new television, gone out to eat on several occasions, the possibilities are many.
Prices in 2011 peaked nationally the second week in May- specifically the 11th, at $3.965. The lowest national average in 2011 occurred January 2, when prices were a mere $3.05 per gallon on average. We're entering this New Year with average gasoline prices nearly 23-cents higher than last year's record price on New Years, a bad omen for things to come.
Last year, we saw prices swing violently higher in late-February and March as oil shipments from Libya virtually halted and civil war broke out. Prices climbed nearly 20-cents in just a week, one of the fastest increases we've ever seen nationally. Will we see such an increase again in 2012? Possibly.
What's on the radar for 2012- what could make an impact on gasoline prices? A few things are most notable. First, our economy in North America. If it continues to grow, that would provide upward pressure on prices- as the economy expands, we use more gasoline for everything from shipping, to our cars, to more manufacturing using petroleum. Second, geopolitical tensions could rise, especially in areas of the Middle East. Libya's crisis may be done and over with, but Iran continues to threaten the West. In response, nations have put painful sanctions on Iran, and as Iran has threatened to shut down vital oil shipping waterways, we could see a supply disruption at the most sensitive time of year- spring and summer. Beyond those two key issues, we'll continue to see prices race higher as summer approaches and we switch to cleaner burning gasoline.
So where are gasoline prices going in 2012? Gregg and I have put an analysis together using a host of different inputs, past history, and speculated how Iran and other issues could impact prices, and it's not pretty. 2011's yearly average, as I pointed out, was $3.513. We believe 2012 could see a yearly average even higher than that. Stay tuned, we're preparing to release our projections in the next week or two.