Current Gasoline Prices Rise as 2012 Comes to an End

The price of retail gas moved up as the New Year approaches. While the current gasoline prices are likely to increase in the coming year, the outcome of the budget talks to avert the fiscal cliff will be the determining factor of the upward trend in gasoline prices.

In case a solution to prevent the fiscal cliff is reached, drivers are likely to witness an increase in gasoline prices for a long period as the good news will surely bring about economic positivity in the market. But, if no agreement is reached over the fiscal cliff negotiations, prices of gasoline will most probably fall on speculation that the demand for fuel will further drop than its fall in the last several months.

The current oil prices are hovering around $90 per barrel as a fiscal cliff agreement stays hanging and gasoline inventories in the U.S. are at their highest in nine months while demand keeps on falling.

AAA spokeswoman Jessica Brady said that almost everything is depending on the outcome of the negotiations to stop the fiscal cliff. In case the policy of automatic tax rises and budget cuts is not prevented and the U.S. economy moves back into recession, gasoline prices will surely drop as fuel demand weakens. In case an agreement is reached, the prices of gasoline will most likely continue its rise throughout January, although it is doubtful if a sudden increase in fuel demand will occur, said Brady.

In the last trading day on the NYMEX during the past week, oil settled at $90.80 per barrel.

By: Chris Termeer