Gasoline prices steadily declined in the fourth quarter of the year so consumers might think that 2012 was a pretty good year as far as the price at the pump was concerned. But they would be wrong.
The national average price over the last 12 months was $3.60 a gallon, according to AAA. That ranks as the most expensive year on record, eclipsing last year's average of $3.51.
The year ended with gasoline prices at or near their low point of the year, giving motorists a break heading into the holidays. The national average price, as measured by AAA's Fuel Gauge Survey, dipped to $3.22 a gallon last week before ending the year at $2.29.
But those with longer memories might recall paying a lot more for gas during 2012. In late January the average price was $3.37 a gallon, less than a dime more than it is now. By the first week in March, the average price had shot up to $3.75 a gallon.
Same old story
What had changed? Nothing really. Prices followed pretty much the same track they did in 2011. Once again, political tensions in the Middle East flared up, prompting oil traders to bid up the price of oil because of fears of a possible supply interruption. No supply interruption occurred but the price at the pump did not come down right away.
By late April the average price edged past $3.80 cents a gallon before dropping back to around $3.35 on the Fourth of July. Then, as the summer driving season ended, fuel prices took off again.
By late September the average gasoline price was back up to $3.83 a gallon, a record high for that time of year.
Ever-present Middle-East turmoil
Oil industry analysts pointed to a variety of reasons for the fluctuating price of oil and gasoline during the year. There was the ever-present fear of turmoil in the Middle East – this time it was worry that a showdown over Iran's nuclear program would be the source of trouble. There were also problems with refineries and pipelines that caused price spikes in California and the Midwest during the summer.
But through most of the year, oil production in the U.S. climbed while consumption steadily declined. In fact, a report last week by MasterCard showed that motor fuel consumption was down 3.6 percent from the same period last year.
What does 2013 hold? AAA predicts that prices will actually go down thanks to old fashioned supply and demand. Domestic production is set to rise and demand should fall even more, especially if the economy slips back into a recession.