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Published: Sunday, 12/9/2012

High gas prices in ’12 set record

Refinery fire, superstorm Sandy fuel rise in cost at pump

BY ERICH SCHWARTZEL
BLOCK NEWS ALLIANCE

Here’s the thing about gas prices: They’re high.

This year, they were so high that they set a record — Americans will have spent more on gasoline in 2012 than in any other year. The yearly national average price will be about $3.63 per gallon, according to GasBuddy.com.

It breaks a record that held the top spot for only one year — 2011 had an average price of $3.51, or 72.6 cents per gallon higher than the bargain-basement days of 2010.

Of course, there is this statistical caveat: Gas prices could fall so severely in these last few weeks that the record-setting average is no longer record-setting. But prices would have to fall to $2.35 per gallon and stay there.

In response, drivers have been saving money by driving less.

In the most recent traffic-volume trends report, the U.S. Department of Transportation noted year-over-year travel in September fell by 1.5 percent — or a loss of about 3.6 billion miles. Those lost miles are enough to travel from the Earth to the moon about 15,000 times.

Fewer miles driven means fewer trips to the gas station, which is believed by experts to be a major factor behind a noticeable drop in convenience-store traffic. In the third quarter, consumer traffic through convenience stores fell 2.1 percent, according to market research firm NPD Group.

Although consumers made fewer trips to the convenience store, they spent more when they were there — the average amount spent in a convenience store trip rose 2.5 percent during those same three months.

“The $3 mark is where we see behavioral changes,” said David Portalatin, a convenience store analyst with NPD. “We change our commuting patterns, and we may normalize around that new price point, but I’m not sure we’re there yet.”

Stores that have attractions beyond gasoline — such as a made-to-order sandwich bar or a Redbox video rental machine — have somewhat inoculated themselves from the drop in business, Mr. Portalatin said.

On a national scale, two events from the past year were cited as major causes of the record-setting average: a refinery fire in California and Hurricane Sandy’s disruption of production along the East Coast.

California’s fire sent prices rising dramatically in that state, especially since the state’s stricter environmental standards for fuel prevent motorists from using gas acceptable in other states. When the fire caused supplies to drop, some parts of California consistently registered gasoline at $4.70 per gallon.

Damage wrought by superstorm Sandy in early November was seen immediately after the storm. In the week before the hurricane, refineries along the East Coast were operating at 81 percent, according to the Department of Energy.

One week later: 58.5 percent.

The East Coast refineries have started to stabilize, with the most recent weekly figures measuring the output at 77.1 percent.

Between now and Christmas, Gregg Laskoski, senior petroleum analyst at GasBuddy.com, said he expects prices to move incrementally lower — the end of the fourth quarter is typically a tempered one at the pump, he said, and output should continue to rise as more refineries recover from the storm’s losses.

But consumers should expect prices to rise after the New Year’s Eve ball drops, he said. The price increases should become particularly noticeable in mid-February and through March and April, as conversions to other seasonal blends always force a price increase.

Gas prices have become a minor discussion point in fiscal-cliff talks in Washington, said Mr. Laskoski. Some lawmakers are proposing an increase in the federal gas tax, which is now 18.4 cents per gallon. But he said a gas-tax increase is not the best way for a politician to win hearts and minds. “There’s not widespread support for that,” he said.

The Block News Alliance consists of The Blade and the Pittsburgh Post-Gazette.

Erich Schwartzel is a reporter for the Post-Gazette. Contact him at: eschwartzel@post-gazette.com



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