Drivers pay more for gas, but still give thanks

[November 26, 2012]  HOUSTON (AP) -- Many drivers are giving more at the pump than a year ago but they still have reason to be thankful. Prices in many parts of the country have fallen recently, and AAA says gas prices could end the year lower than where they started.

The national average Wednesday was $3.43, down 44 cents from mid-September although still 8 cents higher than a year earlier. Gas started the year at $3.28 a gallon. AAA says it should be between $3.10 and $3.30 when 2012 ends.

Still, because the price was so high for so much of the year, Americans are likely to spend a record amount for gas in 2012. Tom Kloza of the Oil Price Information Service estimates that Americans will spend about $483 billion on fuel this year, eclipsing last year's record of $471 billion. And that's even as Americans use less gas by taking shorter trips or driving more fuel efficient cars.

The Energy Department estimates that gas prices will average $3.64 a gallon this year after averaging a record $3.53 a gallon in 2011.

A number of things affect the price of gasoline. It starts with the price of oil, which can be impacted by everything from the strength, or weakness, of the global economy to tensions in the Middle East. That oil is turned into gasoline and other products at refineries. The U.S. has about half the number of refineries it did 30 years ago. When one goes down due to a fire or unplanned maintenance, it can lead to a shortage of gasoline, which sends prices higher.

All of these factors have come into play in a big way this year. That's why prices haven't just been high -- they've been on a roller coaster. There have been four separate swings of at least 40 cents -- two higher and two lower.

The wild swings have been even more notable in individual states. Here's a look at how volatility has contributed to wide swings in certain states over the past year:

NEW YORK/NEW JERSERY:

The long lines are gone but motorists in New York and New Jersey are still paying as much as 30 cents more per gallon than they did a year ago. Even before Superstorm Sandy, drivers in the both states -- and elsewhere in the Northeast -- were paying higher prices because refinery issues caused temporary supply shortages in late summer. Just as supplies were being replenished, Sandy hit. Refineries were shut down, oil imports were delayed and many gas stations were without power. Drivers who didn't want to risk running out of gas waited on lines for hours to fill up. New Jersey and then New York imposed gas rationing. Prices rose more than 10 cents in New York City, Long Island and certain parts of New Jersey, according to AAA.

NEW YORK:

Wednesday average price: $3.92/gal

Versus year ago: Up 27 cents

NEW JERSEY:

Wednesday's average price: $3.55

Versus year ago: Up 30 cents

WASHINGTON:

Gas prices have dropped about 70 cents after jumping above $4 a gallon in May. Most drivers are now getting a discount of about 20 cents compared with last year.

The reason: West Coast refineries, which had been closed for fires or other maintenance, are operating again. That includes BP's Cherry Point refinery in Blaine, Wash. Washington also is benefiting from cheaper crude delivered by rail from the Bakken shale region in North Dakota, where oil production is booming. Bakken crude is on average about $4 cheaper than oil at the Clearbrook, Minn., pricing hub, says Tom Kloza, chief oil analyst at Oil Price Information Service.

Wednesday average price: $3.51

Versus year ago: Down 19 cents

UTAH/NEVADA:

Utah's gain has been Nevada's loss -- and in this case Nevada is happier. Utahns are paying about 30 cents more per gallon than last year. Traditionally, the gas produced by Utah's five refineries was kept in-state, meaning lower gas prices, particularly when demand fell during the winter. That changed in the fall of 2011 when a pipeline opened between Utah and Las Vegas. That's taken the extra capacity away from Utah and helped balance supplies in Nevada, which also gets some gasoline from California, Kloza said. The average price for gas in Las Vegas is about 6 cents cheaper than Utah's state average. A year ago, Utah prices were about 18 cents cheaper than in Las Vegas.

UTAH:

Wednesday's average price: $3.63

Versus year ago: Up 30 cents.

NEVADA:

Wednesday's average price: $3.61

Versus year ago: Up 6 cents

CALIFORNIA:

The price is about the same as a year ago, but that belies the wild ride motorists have taken. Gas soared to an all-time high of $4.67 in October because gas supplies ran short. The state's energy infrastructure took it on the chin. A fire closed part of Chevron's Richmond, Calif., refinery in early August. Plus, a Chevron pipeline that moves crude oil to refineries in Northern California also was shut down and operations at an Exxon Mobil refinery in Southern California were disrupted for days after it lost power. Since few refineries outside the state make California's special blend of summer gas, there were few outside sources to draw from for help. Prices since have fallen nearly 90 cents as supply shortages eased and refiners shifted to winter blends, which are cheaper to produce.

Wednesday's average price: $3.77

Versus year ago: Up 1 cent

GEORGIA:

Drivers are getting a small break at the pump as an indirect result of Superstorm Sandy. Georgia was one of several states allowed to sell a blend of reformulated and conventional gasoline after the massive storm battered the Northeast in late October even though it wasn't in the storm's direct path. It's cheaper for refiners to produce conventional gasoline than blends formulated to control pollution. Georgia also has the advantage of plentiful supplies. The state gets gas shipped through two major pipelines and from refineries in Texas, Louisiana and Mississippi. And its state gas tax is fairly low, Kloza says.

Wednesday's average price: $3.28 per gallon

Versus year ago: Up 1 cent

[Associated Press; By SANDY SHORE]

AP Business Writers Jonathan Fahey and Paul Harloff in New York contributed to this report.

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