NEW YORK (AP) — The price of oil soared in 2011 and will finish about 19 percent higher, on average, after a volatile year dominated by concerns about global supplies. Gasoline followed oil higher this year, with an average for the year of $3.52 per gallon — the highest ever.
And high oil and gasoline prices are expected to continue weighing on the economy as it struggles to grow in 2012.
"It's like leaving the parking brake on while you're trying to drive the economy forward," said Michael Lynch, president of Strategic Energy & Economic Research.
Benchmark crude gave up 82 cents to finish at $98.83 per barrel on Friday, the final trading day of the year.
Overall in 2011, crude prices averaged $95.09 per barrel in New York. That's up from $79.64 in 2010 and $62.11 in 2009. The Energy Department expects prices to rise further in 2012 to an average of $98 per barrel.
After starting the year at $91.38 per barrel, oil prices jumped in February as an anti-government rebellion began in Libya. International oil companies pulled employees from the country as the fighting escalated, and oil production was essentially halted for several months.
About 1.5 million barrels of daily oil exports were cut off during the Libyan uprising. That's less than 2 percent of what the world uses, but with demand rising to 88 million barrels per day, every last drop mattered. Oil prices jumped 25 percent from the middle of February to the first week in March.
The price of benchmark West Texas crude rose as high as $113.93 a barrel in April, then dropped to $75.67 by October.
Prices are again flirting with $100 per barrel following threats from Iran to close key shipping lanes in the Persian Gulf. Iran, which has been accused of trying to build a nuclear weapon, has been threatening to shut down the Strait of Hormuz if the U.S. and other countries target the country with new sanctions.
The waterway is a key route in and out of the Persian Gulf, used by tankers carrying one-sixth of the world's oil exports.
As oil prices rose this year, the global economy cut back on fuel consumption. A private survey released Friday showed that Chinese manufacturing activity slowed in December for a second month due to weak global demand amid U.S. and European economic woes.
In the U.S., gasoline demand dropped by 2.5 percent overall in 2011, according to the Energy Department. Pump prices are down 72 cents per gallon since peaking in May near $4 per gallon. On Friday the national average for a gallon of regular was $3.269, according to AAA, Wright Express and Oil Price Information Service. Analysts expect the average pump to rise to $4 a gallon again by spring.
In other energy trading Friday, heating oil rose 1.75 cents to finish at $2.935 per gallon, and gasoline futures rose by less than a penny to end at $2.6863 per gallon. Natural gas futures fell by 3.8 cents to finish at $2.989 per 1,000 cubic feet.
Brent crude, which is used to price foreign oil that's imported by U.S. refineries, fell 63 cents to end the year at $107.38 per barrel in London.