by Isabelle Esteves

Created on: February 23, 2012   Last Updated: May 10, 2012

Anyone who has gone to the gas pumps recently has gotten sticker shock. The price of gasoline has been rising at an alarming rate. Normally gas prices rise as the summer months and vacation time rolls around. In 2012, winter is only half over and the prices are already through the roof. Everyone is asking the obvious question, why is the cost of gasoline rising?

The cost of oil is usually tied to supply and demand. When the demand is high, the prices follow.  Generally speaking, gasoline consumption has been on the decline. Motorists are curtailing the amount of driving that they are doing and consumers are purchasing more fuel efficient automobiles.

In an article by Mark Glover, for the Boston Herald,  senior petroleum analyst for GasBuddy.com Patrick DeHaan notes, “the United States uses over 300 million gallons of gasoline every day. Even if the decline was 7 percent (in the U.S.), it makes very little difference, given how much gas we use and the increased demand in nations like Brazil, China and India," he said. "Our drop in demand does not begin to offset the increased demand in those countries." It is worth noting that the state of California uses more gasoline than the entire country of China.

Another factor in the early rise in prices this year is the political climate in the Middle East. When there is political unrest in that area, there is always the possibility that the oil supply will be cut off. While the pro-democracy movements are welcome, oil speculators have driven the price of gasoline higher. This year in particular, the prices were already high and the fear has driven them even higher.

The tension that has been increasing between Iran and the United States has not affected the United States directly since they do not supply US oil however, the fact that they are threatening to close the Strait of Hormuz and cut back oil to Europe, has had an overall effect on the market.

Average gasoline prices across the United States are at this time, in February 2012, $3.59 a gallon. This is an average of seven cents more than in January and 41 cents more than in February 2011. While other economic indicators seem to be bouncing back, the gasoline prices seem determined to torpedo the recovery. The price of gasoline affects many other things beyond just what the average consumer has to pay at the pump. It won’t take long for the increases to filter down to grocery stores, restaurants and many other businesses.

The average family is having a hard time making ends meet and the increase in the price of gasoline and the additional increases that it will cause just may be the straw that broke the camel’s back. How much higher prices will go is anyone’s guess but analysts are estimating prices over $4 and possibly even $5 by summer.

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