Gasoline prices start 2012 with 6-cent rise


Gasoline prices aren’t starting off on the right foot in 2012.

The average price of gasoline in Houston rose to $3.12, up 6 cents from the week before, according to AAA gas gauge. Texas saw prices also rise 6 cents to settle at $3.15, and the national average is also up 6 cents to $3.31.

According to the travel agency, Texarkana has the most expensive gas prices in the state at $3.18, and El Paso has the lowest at $3.01.

With those price hikes, Texans are paying 23 cents more than a year ago.

Texans paid $2.92 and Houston drivers paid $2.90 last year. At least some of the New Year increase is due to an expiring ethanol tax credit that raised gas prices by 4.5 cents. Analysts say gas prices will likely continue to rise through the spring before topping out near the $4 mark by Easter.

Edward Morse, a New York-based head of commodities research at Citigroup Global Markets Inc., said gasoline prices may rise above $4 a gallon next summer as refineries along the East Coast shutdown.

As a result, there will be drought of fuel supply.

Sunoco Inc. and ConocoPhillips have idled two plants and plan to retire a third that together could process more than 700,000 barrels  of oil a day. The retirements would drop refining capacity by 46 percent.

“We have a real supply problem ahead this summer because these refineries have not made money and they are shutting down,” Morse said. “Summer gasoline is harder to make than winter gasoline, and we could see $4 as a floor price rather than a ceiling limiting demand.”

Tom Kloza, chief oil analyst at Oil Price Information Service, monitors gasoline prices nationwide. He said prices could rise to the $3.75- to $4.50-per-gallon range, built on unseasonably high gasoline prices this year. While $4.50 per gallon is unlikely, said it is the most “apocalyptic view” of gasoline prices.

Gasoline at $4 per gallon “is a certainty for a number of states unless we have a financial collapse in Europe or a recession in the U.S.,” Kloza predicted.

The federal Energy Information Agency, which monitors gasoline prices, has a slightly brighter view of a gasoline prices in 2012, but it isn’t much better.

American drivers are projected to pay on average $3.45 for 2012, slightly down from the $3.53-per-gallon price for 2011, according to EIA. Crude oil prices are likely to stay in the $90 to $100-per-barrel range for 2012, the agency reported.

The Des Moines Register notes the high gasoline and crude oil prices come as the U.S. has jumped on the “drill, baby, drill” bandwagon.

Onshore drilling rigs have increased from 768 at the beginning of this year to more than 1,100 in early December. That represents a 24-year-drilling rig high, and as a result, crude oil production is rising and imports are dropping.

“This rising trend in production is driven by increased oil-directed drilling activity, particularly in on-shore shale formations,” the DOE said, in particular reference to the burgeoning Bakken Field in North Dakota, which has quadrupled production since 2006.

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Categories: General

32 Responses

  1. 1911fan says:

    What good does it do for gasohol to burn cleaner if it lowers mileage, consumes more dirty fuel in production – diesel for planting, cultivating, harvest, and hauling to market, coal to distill the alcohol, more fuel to haul to market for blending, that’s at least 6 dirty fuel consuming stages! The brilliant eco nuts never mention the calculations and pollution effects of all those production and market stages, they act as if the alcohol just rains out of the sky, it doesn’t. It’s a stupid wasteful subsidy plan and it should have been stopped years ago.

  2. Glenn Beak says:

    “Looks like the government is getting what they wanted.”

    The government gets to save the money it paid gasoline produecers to buy ethanol. Don’t expect cutbacks in government spending to be painless.

  3. Oil Patch 41 says:

    Emil; do you know what ethanol is? It is alchol that is refined from corn. It may be less harmful but it reduces gas mileage, and consumes more energy to make than it produces. We have let the environmentalist change our lives but not always for the better first it was lead in gasoline, then MTBE, there are other solutions but none that are more political than the current ones.

    • Dan X. McGraw says:

      Oil Patch, ethanol also oxygenate gas, making it burn cleaner and more efficiently than a non-blend. There are positives and negatives to the ethanol-gasoline blend.

  4. Raymond Johnson says:

    What difference does it make if you “drill baby drill” and there’s no refinery to refine it?

  5. KaliGhoulish says:

    Oh Joy!

  6. XLR8R says:

    January 5, 2012, 8:04 AM
    Let’s see, the first time gas prices hit $4 a gallon, a guy named BUSH was supposedly running the country. And he was, what? Oh, yeah, a REPUBLICAN.

    Hey Paul, wehn that happened who was running both the House and the Senate?? Oh, Yeah! it was the DEMOCRATS! The POTUS only recommends, Congress holds the Purse Strings!

  7. chill out says:

    Gasohol was supposed to make fuel cheaper by reducing the amount of oil we consume. Instead it has made food prices go up not just hear but around the world. On a planet of 8 billion people food should never be used to make fuel, it doesn’t make sense and it does more harm than good.

    • Emil says:

      More ignorant people drinking the Koolaid about Ethanol. Why don’t u wake up and do some study about. It’s less harmful than gas.

  8. Topshelf2 says:

    Ok I understand a $.045 tax increase. What I don’t understand is the Kroger station going from 2.91, a week or 10 days ago, to 2.99 last Saturday then 3.09 Sunday night and then yesterday its 3.19. Then I read the biggest US export is fuel. I think we are getting the short end of the stick. Plus how long agom were we being told there was a shortage of oil?

    • Dan X. McGraw says:

      Topshelf2, some of that increase is the ethanol credit, but crude oil prices have risen sharply this year. You are likely seeing an increase as a result.

  9. Scott says:

    Call your members of Congress and ask them to fix air pollution some other way than making petroleum refining expensive and difficult. Get rid of the oddball blends that cost more to produce. Stop the permitting nightmare for refineries. Gasoline should be cheap and plentiful…. end of story.

  10. coker guy says:

    Excellent point Dan. Most people seemed to have forgotten the idiotic move several years ago to put ethanol in gas instead of MTBE, which was cheaper and a better product. Ethanol can’t make money so the govt (make that the tax payer) has been subsidising ever since.

    And to someone else’s point about oil company profits. The oil companies make their money on the upstream business, not refining. Refining is and always has been (with the exception of 2005-2008) a very low margin and difficult business. That is why those plants in the Northeast are shutting down; they have low complexity and thus have to buy the most expensive crude to operate. Our refinery is complex and we lost $30 million in November. One of our other refineries lost $70 million in the same month. Yes, oil companies make money extracting and selling oil, but refining is a dog with fleas.

  11. ntangle says:

    Thanks Dan, I was referring to the big increases Mr. Morse predicted due to supply. Maybe he implied that such increases would be confined to the NE, but I didn’t read that.

  12. ILoveGreatDanes says:

    I wonder when people are actually going to do the math and figure out that waiting in line at a gas station to save $0.07/gallon when the more expensive one across the street is just silly. If they put 15 gallons of the cheaper gas in their tank, they’re only saving $1.05. Even if there is a $0.15 difference and they put 20 gallons in, that’s only a $3.00 savings. It’s a lot easier to pinch pennies in other ways. I get annoyed when I have to pay more per gallon to use my debit card, since I usually fill up and get $45 worth of gas at a time. So I go to stations that don’t charge more for debit out of principle.

  13. Earl Richards says:

    Google the “Global Oil Scam” by Phil Davis. Purchase solar panels and electric cars.

  14. ntangle says:

    Can understand why the 3 refineries are shutting down. Can’t understand why that would drive the price of gasoline higher, especially around here. The price of refined products is driven by consumer demand, unless it exceeds supply in a particular PADD. There will still be ample refining capacity in the US after the 3 are shut down. Whether there is enough transportation capacity for enough bbls to reach the NE is an open question.

    • Dan X. McGraw says:

      ntangle, I think the increase is mainly due to expiring ethanol tax credit. It was 4.5 cents so the New Year started with a 4.5 price jump.

  15. Terry says:

    I guess they figured everybody had to fill up to go back to work and school after the holidays so they decided to stick it to us..again.

  16. bob says:

    blah blah blah,
    christmas is over, they didn’t want to raise prices in december because you were shopping.
    now it’s their turn to screw us.

  17. TheRealRick says:

    How is this news? There are obese children in American and Lady Gaga’s new religion that we must be very aware of.

  18. detada says:

    Interesting how gasoline prices always seem to spike upward a lot quicker than they come down. Oil companies and their party of NOthing minions are the true beneficiaries.

  19. Markie Mark says:

    Dear President Obama,


  20. shockwave says:

    Not made money?! Have you SEEN the profit reports these oil companies are posting?

  21. Flippy says:

    Hope I have some change left at the end of the year……

  22. Paul says:

    Let’s see, the first time gas prices hit $4 a gallon, a guy named BUSH was supposedly running the country. And he was, what? Oh, yeah, a REPUBLICAN.

  23. WriterDude says:

    Jennie: Did you not read the part where it says gas will be cheaper this year than last year, and that oil production is up?? And, the idea that Obama has a significant hand in the price of gas is idiotic.

  24. tboyinhouston says:

    I bought a 40 mpg car and have not looked back.

  25. WriterDude says:

    Then why have we been exporting gasoline??

    I’m beginning to think that the oil and gas market is not driven by supply and demand, but by manipulation and speculation.

  26. Obama is ruining The USA

  27. Jeff says:

    They obviously don’t check the prices in Lufkin-Nacogdoches area, posted prices are $3.22 to $3.24, higher than Texarkana.

  28. disheveled1 says:

    Looks like the government is getting what they wanted.