Gasoline prices are up sharply in the past month on surging crude oil costs and refinery woes, and now are likely to make 2012 the costliest year ever at the pump.
USA Today reported that nationally, gasoline averages $3.71 a gallon — up 31 cents since mid-July and is now higher than year-ago levels in 39 states. Prices are likely to continue climbing through August, with little relief until after Labor Day.
The swift, month-long, 9% price climb has lifted 2012’s average to $3.61 a gallon, vs. 2011’s $3.51, which had been the most expensive year ever for motorists. Even with demand expected to recede after the peak summer driving season, 2012 will surpass last year’s price, says Brian Milne of energy tracker Telvent DTN .
The run-up comes at a time when prices typically have peaked for the year, and just weeks after decreasing demand and slowing worldwide economic growth pushed prices well off 2012 highs. The trend had prompted some industry experts to forecast $3 a gallon gasoline by autumn. Now, Milne expects a top at about $3.90 before dropping in September.
Motorists in the Midwest are already paying that much, or more. Fallout from production cuts at four Illinois refineries has pushed prices in Illinois and Michigan to $4 or higher, while West Coast prices rocketed 40 cents a gallon following the Aug. 6 fire at a Northern California Chevron refinery. (A lawsuit was filed in Contra Costa County Superior Court Wednesday on behalf of nine nearby residents, alleging Chevron was negligent in refinery maintenance. The company says its reviewing the lawsuit.
Crude oil prices continue to rise. Since bottoming at about $78 a barrel in late June, benchmark West Texas Intermediate has soared more than 20%. In mid-day Thursday trading, crude was priced above $95 a barrel, a three-month high.
Scott Anderson, chief economist at Bank of the West, says if prices continue to rise, they could crimp a rebound in consumer spending. The Commerce Department reported Tuesday that July consumer spending rose 0.8%, the largest gain in five months.