Gasoline prices start the year at a high — and rising

Not only are we worrying about the end of the world in 2012 — thanks, Maya calendar makers — but this also may be the year of the gas-pocalypse, analysts warn. That’s because gasoline prices are the highest ever for the start of the year, and they’re on the rise, supercharged by expensive oil and changes in refinery operations.

In California, the average price of a gallon of regular gasoline was $3.666 on Thursday, up 8.1 cents from a week earlier and up 33.1 cents from a year earlier, which had been a record price for this time of year, according to the AAA Fuel Gauge Report. Nationally, a gallon of regular was averaging $3.319, up 6.5 cents from a week earlier. That topped 2011’s record-setting start by 24.2 cents a gallon.

It’s the wrong way to kick off the new year, said Susan Sutter of Anaheim, who has seen the price of a gallon of gasoline at her local Arco station rise 18 cents, to $3.49, in the last week.

“I’m just appalled,” said Sutter, 54, who drives a Honda Civic sedan. Sutter’s ire wasn’t cooled by the fact that she was paying quite a bit less than the state average.


“I just hate these prices,” she said. “Someone is lining their pockets, and it sure isn’t me.”

Of course, current prices don’t guarantee future prices, but analysts are predicting that motorists will be digging deep this year to fuel their vehicles.

“Average gasoline prices are moving up as we enter the new year, a trend that has held since 2008,” said Patrick DeHaan, senior petroleum analyst for, a website that tracks fuel prices. “We’re starting 2012 about 20 cents per gallon higher than 2011, setting up an ugly year for motorists.”

Energy Department statistics suggest that U.S. drivers won’t be getting any good news on prices soon.


In 2010, the year of the smallest recent gap between start-of-year prices and that year’s peak, the rise was 14.5% nationally and 10% in California. That translated into a jump of 38.7 cents a gallon in the U.S.’ average gasoline price and 30 cents in California’s.

The biggest recent start-to-peak increase came in 2009. Nationally, the average gasoline price started the year at $1.684 a gallon and climbed 60% to $2.694, a jump of slightly more than a dollar. In California, the average price per gallon soared 75%, to $3.287 from $1.874.

And 2011 showed that when prices start out high, it doesn’t take a huge percentage increase to add to consumer woes. Average prices rose 29% nationally in 2011, a jump of 89.5 cents a gallon to the year’s peak of $3.965. California prices also rose 29% last year, for a 95-cent rise to the high of $4.257.

The AAA Fuel Gauge Report mirrors the trend shown by the Energy Department’s weekly telephone survey of service stations. The averages reported by AAA are gathered daily by the Oil Price Information Service using credit card receipts from more than 100,000 outlets.


This year’s gasoline prices could be significantly higher than in previous years, said Tom Kloza, chief oil analyst for the Oil Price Information Service.

“Somewhere between the Grammys and the Oscars, the gasoline market and perhaps the crude market will trend considerably higher,” Kloza wrote in his blog, Speaking of Oil.

Kloza cited three potential causes: “International worries about a second Arab Spring will combine with domestic concerns about U.S. refinery maintenance and the closure of at least two critical East Coast refineries” to push prices higher.

In addition, U.S. refiners have been exporting record amounts of diesel fuel as they pursue profits from foreign buyers, causing an increase in diesel production at the expense of gasoline production. Tighter gasoline supplies mean higher prices.


History isn’t on the side of U.S. consumers. Kloza said that U.S. average gasoline prices have jumped in 11 of the last 12 years, to the record-high average of $3.514 a gallon for all of 2011. Oil prices are also starting the year on the move, another discouraging signal for gasoline prices, Kloza said.

The U.S. benchmark grade of oil, West Texas Intermediate, has remained above $100 a barrel in the three trading days so far this year on concerns about Iran’s threat to close the Strait of Hormuz, a key passage for oil transport.

The price eased a bit Thursday, falling $1.41, or 1.4%, to $101.81 on the New York Mercantile Exchange after the Energy Department said U.S. oil stockpiles increased by 2.1 million barrels from a week earlier instead of declining 1 million barrels as analysts had expected. In London, the European benchmark, Brent North Sea crude, slipped 96 cents, or 0.8%, to $112.74.