2012 gas prices highest on recordPublished Jan 4, 2013 at 11:28 am (Updated Jan 4, 2013 at 11:28 am)
It was a small Christmas present for Pittsburgh motorists, but gasoline prices began the new year at a higher rate.
AAA reports that the year ended with Pittsburghers paying $3.504 on average for a gallon of regular gasoline, a dime higher than at Christmas.
The year ended with an annual national average of $3.60 per gallon, the highest on record and nine cents more expensive than the previous high of $3.51 in 2011.
Still, AAA expects national gas prices to average less in 2013 then they did in 2012.
One motorist, Robert Paul, a Scott Township salesperson, while pleased with the reduced cost, said he was still concerned about fuel spending since “it comes right out of my pocket.” And Shirley Coughanour of Mt. Lebanon, who retired from Kaufmann’s, said that more affordable gas is “good for the economy because people can go places and spend more money.”
Consumer spending accounts for two-thirds of our $14 trillion economy, and one estimate said that the average American household spent $4,000 on gasoline in 2012, the most ever.
Market forces of supply and demand explain much of the recent gas price shift. These include the change to winter-blend fuel, which is less expensive to produce. There is also less worry about weather-related refinery disruptions. Before Hurricane Sandy, for example, East Coast refineries were operating at 81 percent of capacity. After the October storm, it was 58.5 percent.
The relatively modest cost of crude oil has also put downward pressure on gas prices. America’s benchmark oil, West Texas Intermediate (WTI), sold for $91.82 a barrel on the New York Mercantile Exchange at the end of trading Dec. 31. WTI peaked for the year at $109.77 per barrel on Feb. 24. The U.S. Department of Energy reports that domestic crude production at the end of 2012 hit 6.5 million barrels a day, the most in 15 years, largely because of advances in drilling technology.
Greater supply has been paired with less demand. Drivers cut back on gas consumption in the winter; the slow growth of the U.S. economy, less than two percent over the past 12 months, has also cut oil demand.