Expect Higher Gas Prices This Year


The economy is making gains on its path to a slow recovery, which means consumers can expect higher gas prices this year.

"When the economy improves, we will be using more petroleum," explains Patrick DeHaan, senior petroleum analyst at GasBuddy.com. "It's all but a certain that prices will likely go up this year."

The Department of Energy released its 2012 oil forecast Tuesday, upping the price of crude oil to $100 per barrel, which could be bad news for consumers because the price of oil directly correlates with gas prices.

For 2011, the average price per barrel of U.S. crude oil was $95 per barrel, according to the Energy Department, and according to GasBuddy.com, the yearly average for 2011 was $3.51 per gallon. The current national average of unleaded regular gas two weeks into 2012 is $3.34 per gallon.

With the current national average so high at the beginning of the year, DeHaan says things aren't looking good for motorists.

The same can be said for those looking to travel by plane this year. Experts expect jet fuel prices to increase in the year, a cost airliners will likely pass on to travelers. According to DeHaan, distillate oil is currently being exported at a record pace, which puts pressure on jet fuel and heating and oil prices.

"This is also magnified by jet companies removing excess capacity from planes," DeHaan adds.

Geopolitical issues are also driving fuel prices up, DeHaan says. The Strait of Hormuz standoff in Iran could have a similar impact on prices as the Arab Spring did in 2011, he says.

"If [Iran] successfully disrupts transport it will have a significant impact on prices. We can be talking about a rise of between $15 and $40 per barrel. The Strait of Hormuz is a waterway that 60% of the world's crude oil travels through, so this will have a major impact on energy prices."