IRON MOUNTAIN - There are a number of reasons why gas prices will be higher this year, experts say.
GasBuddy.com, founded in 2000, reports that gas prices this year are predicted to peak in May at $4.15 a gallon for regular unleaded.
The lowest price per gallon will occur this month, followed by February.
GasBuddy experts are predicting gas prices to hit $4.02 for the Easter holiday in April, $4.15 for the Memorial Day holiday in May, $4.06 for the Independence Day holiday, $3.95 for the Labor Day holiday in September, $3.71 for Thanksgiving in November and $3.66 for Christmas in December.
"While the 2012 outlook isn't what I'd call rosy, we can look to Europe at their $6 to $9 a gallon gasoline and be happy that we're still not paying as much as some countries," said Patrick DeHaan, senior petroleum analyst for GasBuddy.
Few Americas take comfort in Europe's situation.
DeHaan added that 2012's Iran situation is far worse that the situation with Libya last year.
"Consumers who think the Iran situation is over-hyped clearly don't understand the high stakes behind not only the Strait of Hormuz, but behind the Iran's feud with the west," he said. "Motorists who drive a SUV may want to consider calling their banking institution and obtain a credit limit increase so they can afford this summer's fuel expenses."
AAA spokesperson Nancy Cain said although it's hard to predict what gas
prices will be this summer, motorists should plan on spending more in summer for gas.
"Plan a little extra and build it into your travel budget," Cain said. "Gas prices have been up and down and it's hard to say for certain what prices will be at the pump."
Gas experts note there are several reasons why gas prices may climb so high.
Cain said the main driver of gas prices is crude oil and when that goes up, pump prices do, too.
Because of warmer temperatures in the summer, more people drive at that time of year, which also causes prices to go up, she said.
Cain notes that besides setting aside more money for driving, motorists can pay with cash at the pump.
"Sometimes it is cheaper than credit unless you have cash-back or rewards on your card," she said.
DeHaan said motorists can expect extreme volatility in gasoline prices during 2012, but most notably during the following periods for the following reasons:
- April 15 through May 31: Refineries begin producing cleaner burning summer gasoline and perform maintenance. Problems typically arise from plant restarts and low supply of mandated
blends.
- Aug. 1 through Sept. 15: Hurricane season has brought significant harm to oil infrastructure in the last decade, and while hurricanes are not guaranteed to impact such facilities, such an event could interrupt notable infrastructure: Louisiana Offshore Oil Port (LOOP), Gulf Coast refineries, Strategic Petroleum Reserve, Offshore oil drilling. The fear of a storm impacts oil prices.
- Oct. 15 through Nov. 15: Winter gasoline phase in will likely lead to some downward direction, but could also result in some volatility surrounding refinery maintenance. This time frame will likely see lower volatility in prices compared to the previous two time frames.
Also energy issues likely to have a significant impact on gasoline prices including the following:
- Iran: Continued destabilization of Iran, and perhaps other parts of the Middle East will make a strong impact on gasoline prices. Continued threats will haunt the market and could drive prices higher. Iran continues to be a major factor that could result in higher gasoline prices in 2012.
- Record gasoline and distillate exports have kept pressure on domestic prices. As of January, 2012, the Energy Information Administration reports that distillate exports amount to almost 25 percent of all domestic production. Refineries may elect to send material out of the U.S. as margins become slim on gasoline during the cooler months.
- Keystone XL: The proposed new pipeline has the potential to shake up prices in either direction. Taking a cheap source of crude away and subjecting it to international markets will likely mean higher prices for Canadian Sour, a grade of oil used nearly exclusively by Midwest refiners. Approval could mean higher prices for Canadian Sour crude, thus an increase being passed on to motorists. It could also result in slimmer margins for refineries that have long enjoyed profitability using the oil.
AAA experts say motorists should not let their car warm up for more than a few minutes in the summer or they will be wasting gas.
Cain said the average car is on the road for 8.1 years, and regular tune-ups along with oil changes and spark plug changes will help with fuel consumption.
Also motorists should check with their owner's manual as they may not need premium grade fuel in their vehicle.
"Drive conservatively. Avoid jack rabbit starts and stops," Cain said. "Slowing down can improve gas efficiency."
Lisa M. Hoffmann's e-mail address is lhoffmann@ironmountaindailynews.com.
