Gas Prices: AAA’s Fuel Gauge Report | December 31, 2012

(WASHINGTON, December 31, 2012) Today’s national average price for a gallon of regular unleaded gasoline is $3.29. While this price is more than 10 cents less than one month ago, it is 4.5 cents more expensive than one week ago and 1.6 cents more than one year ago. The year ended with an annual average of $3.60 per gallon – the highest on record and nine cents more expensive than the previous high of $3.51 in 2011.

After falling for 28 consecutive days, the national average price at the pump has now increased for nine of the past 11 days. Today’s price is the highest on record for this calendar day and continues the streak of daily record prices that began on August 20. Barring a dramatic change overnight, tomorrow’s price at the pump is likely to be the highest ever to begin a year. Despite the pricier start, AAA expects national gas prices in 2013 to average less than they did in 2012.

On the final day of 2012, commodity and financial markets remain focused on negotiations in Washington to avert the “fiscal cliff.” If a deal is not reached and Congress does not act to quickly resolve the issue, most analysts predict that stock and commodity prices will decline as markets account for the likelihood of a weaker economy. Should an agreement be reached in the coming days, commodities prices could move higher as investor confidence returns and economic fears are allayed.

In 2012, prices increased to begin the year as geopolitical tension with Iran mounted and the “fear premium” in oil markets propelled the national average price at the pump to a high of $3.94 on April 5 and 6 – more than 65 cents higher than the price to begin the year. While a resolution to the “fiscal cliff” negotiations in Washington could pressure gasoline prices higher to begin 2013, it is unlikely that this increase would be on par with a year ago. Continued economic concerns, weak demand and increased domestic crude oil production are likely to temper any seasonal price increase in the coming months.

At today’s close of formal trading on the NYMEX, the price of West Texas Intermediate (WTI) settled at $91.82 per barrel, up $1.02 on the day. Afternoon news that a compromise in Washington might be near helped send prices higher to the fourth consecutive settlement above $90 per barrel. Prior to December 20, WTI had not settled above $90 since October 19. While oil prices are rising, they remain more than $10 less expensive than the $102.96 settlement price to begin 2012. WTI peaked for the year at $109.77 per barrel on February 24.

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