Rising Gasoline Prices 2012. Neelesh Nerurkar, Specialist in Energy Policy; Robert Pirog; Specialist in Energy Economics; March 1, 2012
“Average national gasoline prices have increased by $0.46 to $3.78 per gallon between the end of December 2011 and the end of February 2012. This is $0.20 higher than the 2011 average annual gasoline price of $3.58 per gallon. In the first half of 2011, unrest in the Middle East and North Africa contributed to higher crude oil prices, which pushed gasoline prices higher. In early 2012, tensions with Iran are contributing to rising crude prices, which again are pushing up the price of gasoline. Higher gasoline prices burden the budgets of households and businesses. Higher gasoline costs can increase indebtedness or reduce spending on other goods and services. They also yield a windfall for crude oil producers because the rise in gasoline prices is driven primarily by higher crude oil prices. The revenue increase is primarily for crude oil production as opposed to refining; crude oil is a cost for the refining business. Crude oil prices are the main determinant of gasoline prices. A key issue affecting crude oil prices in recent months has been uncertainties around supply stemming from tensions with Iran as new U.S. and EU sanctions come into place. Unrest in several small oil producers has also led to supply disruptions. Also, there are persistent concerns about the adequacy of global supply in the face of sustained demand growth in emerging economies. Recent refinery closures in the United States, Europe, and elsewhere may also contribute to higher gasoline prices, particularly in parts of the East Coast.”
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