To the dismay of drivers across the country, 2011 went down in the record books as having the most expensive gasoline average ever, $3.513 for the year, 72 cents per gallon higher than 2010′s yearly average, according to GasBuddy.
Patrick DeHaan, GasBuddy’s senior petroleum analyst, projects that by Memorial Day, the national average will be between $3.86 to $4.13 per gallon, and that prices in 2012 will come close to or set new all-time highs. If that happens, drivers could spend $200 to $300 more for gas this year.
Inflation adjusted data from the Energy Department’s U.S. Energy Information Administration confirmed that 2011 was a record year. The real annual average for a gallon of regular gas last year hit $3.56, up from $2.90 in 2010, according to the EIA. From its data that begins in 1919, the previous record high was in 1981, at $3.45.
Of course, in 2008 gasoline prices had the longest stretch of $4 or more, but the yearly average was $3.24, according to GasBuddy’s data, which goes back to 2000. In 2008, gas prices slid from October to December 2008 to less than $2 a gallon nationally.
Over the past seven years, according to GasBuddy data, gasoline prices rise an average of 93 cents per gallon from the start of the new year to when they eventually peak the same year, DeHaan said.
“Typically, prices peak in the summer months, or around Memorial Day, as has been the case in 2010 and 2011,” he said.
An increase of 93 cents a gallon could mean average gas prices may rise more than $4 a gallon and could easily approach record highs, he said. In 2004, gas prices had the largest price difference from the new year to their peak, when prices climbed $1.31 per gallon.
If such a gain occurred this year, that would mean the national average could rise to well over $4.25 a gallon, and some areas could see $5 a gallon.
“While that’s not very likely, it does represent a realistic worst case scenario,” he said.
DeHaan said he is traditionally reserved about forecasting oil prices, which hovered above $102 a barrel Thursday. But he said 2012 would almost certainly break all records, in part because of political tension with Iran over its nuclear program.
Iran has threatened to close a key oil passageway, the Strait of Hormuz, in possible retaliation for new economic sanctions from the U.S. and the European Union. Iran holds the world’s fourth-largest proven oil reserves, and the world’s second-largest natural gas reserves, according to the EIA.
Should Iran become more hostile and cause a supply disruption, oil prices could soar to all-time highs and approach $175 to $200 a barrel, DeHaan said.
“Coupled with rising demand as a result of a recovering economy, it won’t be pretty,” DeHaan said. “Either way you look at it, 2012 will be among the worst year ever for gasoline prices.”
Daniel O’Connell, senior energy broker with INTL FCStone Inc., said if the price of crude oil increases 8.2 percent in 2011, the U.S. could see a similar price hike in 2012 as jobs, housing and other economic data improve. O’Connell said overall data points to a volatile market with the same trading ranges as those of 2011.
But “if the Iran situation escalates two fold, all bets are off the table, and we will see a disaster regarding energy prices, that this country is not ready to handle just yet,” O’Connell said.
DeHaan said there was still time to lessen the anticipated impact by changing habits or modes of transportation.
“But if they don’t, I can see the average American spending a few hundred dollars more on gasoline this summer,” he said.