Be not fooled by the current fall in gasoline prices.
Neither booming domestic oil production nor much greater fuel efficiency that is causing US oil consumption to fall produced lower gasoline prices this year. Indeed, during the spring, soaring prices at the pumps hammered consumer demand and threatened recession.
For the whole of 2012, gasoline prices will set a new record high, breaking the record set just last year. Gasoline will average during 2012 $3.63 per gallon. www.eia.gov/forecasts/steo/pdf/steo_full.pdf. The 2012 price is up from the 2011 average of $3.53.
The record high prices in 2012 are being packaged in a soothing, addictive end of year price drop. National average gas prices fell to $3.25. www.cnbc.com/id/100322235. CNBC also reports that gasoline currently averages $2.95 in Missouri, the lowest state average.
The current price drop is enjoyable but not likely sustainable. The EIA projects that gasoline will average $3.43 per gallon in 2013. That would not be still another record but, nonetheless, a year of high prices.
High oil and gasoline prices remain a major threat to our economy. Their persistence, despite booming domestic oil production and falling consumption, reminds that oil is priced globally and that shifting from oil to substitutes is the only way to end oil's continuing threat to US economic growth.