Consumers' Gasoline Costs Reaching Record Levels

You don't have to tell consumers how much gasoline prices have risen in the last year. But even beleaguered motorists might be surprised at just how much, collectively, they are paying at the pump.

The Oil Price Information Service (OPIS), a research firm, estimates U.S. consumers will spend $491 billion for gasoline in 2011. That's more than the total spent in 2008, when gasoline prices soared to record highs.

The difference, the firm says, is in 2008 prices crashed back to earth after hitting that record high. While prices haven't hit the 2008 record this year, they've remained at consistently high levels.

97 cents a gallon more than last year

The national average price of self-serve regular gasoline today is $3.642 a gallon, according to AAA's Fuel Gauge Survey. Exactly one year ago, the average was $2.71 a gallon. What's changed in the last year?

At the moment, U.S. gasoline demand is actually down but supplies have tightened, mainly because the U.S. is selling more refined gasoline and diesel fuel to other countries.

The U.S. Energy Information Administration (EIA) reported last week that U.S. petroleum products exports are up more than 60 percent since 2007, with most of the increase made up of finished gasoline and diesel fuel headed to Latin America. The increases for gas and distillate represent advances of 133 percent and 144 percent in the four-year period.

"If it weren't for the higher export demand, the U.S. market would be flooded," OPIS quotes one trader as saying.

Truckers bearing the brunt

Instead, gas prices have remained high and American truckers continue to pay close to $4 a gallon for diesel fuel, keeping the cost of transporting raw materials and finished products high. Though often overlooked, the impact on the economy shouldn't be understated, according to one economist.

“Early in 2011 the economy was about to shift gears, creating close to 200,000 jobs each month,” said economist Joel Naroff, of Naroff Economic Advisors, in Holland, Pa. “What these higher fuel prices did was pretty much kill that recovery.”

Not only did it take more money out of consumers' pockets, preventing them from spending on other things, it affected confidence in a negative way.

“Nothing affects people more than threats to their disposable income and their jobs,” Naroff told ConsumerAffairs.com.

A bit more complicated

What used to be a straightforward expectation for U.S. crude oil prices, OPIS notes, “is now a bit more complicated.” EIA expects the U.S. average refiner acquisition cost for crude to be $100 a barrel this year and $103 in 2012.

At that level, Naroff says alternative energy sources – including oil shale as well as renewables – should become competitive and help stabilize energy prices. So far, they haven't.

“The question we should ask, is why not,” Naroff said.