3 Reasons Oil Prices Are Headed Higher in 2012

gas pricesAmericans have grown used to oil at $100 a barrel and paying more than $3 per gallon for gas at the pump. But don't get too comfy -- the price of filling up is probably going up in 2012.

Uncertainty in the Middle East, growing global demand, and a lack of easy oil will be the drivers behind the price spike, and as we've seen recently, any change in the status quo will send the black gold higher.

1. Countries with Crazy Leaders Produce a Lot of Oil

Crazy leadersIn case you've missed the latest in Iran's continuing nuclear drama, the country is threatening to blockade the Strait of Hormuz if the U.S. follows through on sanctions over its nuclear program.

The Obama administration and many analysts are brushing aside that threat because it would hurt China, a strategic ally of Iran, more than the U.S. But many people think that if Iran is serious, the situation could end in military action. Even this threat of action has supported oil prices in recent days, and it highlights how fragile the Persian Gulf -- and oil price stability -- is right now.

With the U.S. pulling out of Iraq and Libyan oil beginning to flow again, there are relatively few supply disruptions right now. But Iran could change that in just a matter of days.

2. Global Demand is Only Growing

Getty ImagesIn the U.S., demand for oil may not be growing much, if at all. But emerging markets like China, India and Brazil are certainly picking up the slack and increasing their demand.

In November, China imported 32.3% more oil from Saudi Arabia and 76% more from Russia than it did in the previous year. With millions of new vehicles hitting the road in China every year, that trend will continue.

The situation is similar in India, where imports play a huge role. In 2010, India imported about 70% of the oil it consumed, most of which came from the Middle East.

Unless the global economy heads for a recession in 2012, global oil demand will continue to increase and prices will likely rise as a result.

3. Oil is Getting Harder to Find

oil is hard to findOne of the biggest reasons U.S. net petroleum imports have fallen from 60.3% of consumption in 2005 to 45.4% so far in 2011 is that sources of oil have become more unconventional.

Unlike the good old days of Standard Oil, when you could drill a hole and oil would come spurting out, hydraulic fracturing in shale is much more complicated and has only relatively recently become economical.

Kodiak Oil & Gas (KOG), Continental Resources (CLR), and Whiting Petroleum (WLL) are three of the oil companies using this technology to unlock oil in the Bakken shale play in North Dakota and Montana. But it isn't cheap, and these producers need oil prices to remain high to continue their production.

The same goes for ultra-deepwater drilling around the world. Cobalt International (CIE), Statoil (STO), and Total (TOT) are all eagerly anticipating drilling in deep water off the coast of Angola. But the ocean there can be more than a mile deep, and the wells themselves will be drilled more than a mile farther underground -- not a cheap endeavor even if the reserves they find are as large as expected.

The Final Conundrum

Beyond the gas station, the price of oil in 2012 will have a far-reaching impact on the economy. As prices go up, consumer confidence goes down, and we cut back on spending to prepare for bad times. But if prices fall, it could mean we're headed into a recession -- something no one wants right now.

The only silver lining is that the higher prices will also push explorers to expand production domestically and create more jobs. But that's small consolation when you're filling up at the pump.

Motley Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool and check out his personal stock holdings. Motley Fool newsletter services have recommended buying shares of Total and Statoil.

How Are Soaring Gas Prices Affecting You?
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3 Reasons Oil Prices Are Headed Higher in 2012
These days, it seems like the cost of gas is rising by the hour. From canceling vacations to buying hybrids, skyrocketing gas prices have inspired AOL users to make a wide variety of lifestyle changes.

Click through our gallery to see the measures people have taken to save at at the pump.

' Post: Have Gas Prices Affected You?

First Up: Lose the Gas Guzzler

"Traded in my Toyota Tundra for a Toyota Yaris ... any difference? Yes, an extra $45.00 in my pocket with every fill-up. Don't wait. Dealers are trading in for less every day."

Next: Walk, Don't Drive

AOL User Rvarg1346 Says:
"I have resorted to filling my car once per month instead of 3 to 4 times as in the past! If I run out of gas, I park my vehicle and walk to the grocery store and go nowhere else. It's either that or go hungry! It used to cost me $32 to fill my car, and now it's close to $75 dollars, which is absurd. I cannot afford it!"

Next: Out of Business

AOL User Agreg336 Says:
"Because of the high gas prices, I was forced to shut down my business. As a courier company, gas prices have a huge impact on productivity, and being able to get to customers even in nearby counties."

Next: Soccer Mom No More

AOL User CrawfordSPOOKY Says:
"I am having to cut back on the sports my kids play. I can't afford running to two different practice fields and two different game schedules."

Next: Love the Car You're With

AOL User Polesecc Says:
"I have a 2002 Ford F150 Lariat 4x4 and paid it off last year. I did synthetic maintenance and it still runs like new after 120K miles and a few new parts. It gets 15 mpg, and I just don't use it as much as I used to because of the gas prices. I really want a new one but just can't justify it. I lowered my insurance big time since I've owned it, and I still go camping with the kids, as this is the most important thing to me."

Next: Forget the Road Trip

AOL User Souettelee Says:
"I usually fly to Vegas from Tenn., and then rent a small car to travel the Southwest -- tons of National Parks and National monuments to visit and explore. Not this year. Maybe I'll fly to Vegas (free ticket from VISA rewards) and lay around the pools. Some hotels offering nights around $30-50 because tourists are opting to stay home this summer. I'll miss hitting the mom & pop motels and diners."

Next: The Wheels on the Bus Are Cheaper

"First, I bought a Hybrid car about a year ago. LOVE IT. I had to give up my parking spot at work (prices went from $13 to $30 per pay period) and as an incentive, I got a free bus pass from my employer. I've been riding the bus ever since. More and more people where I work are either carpooling or doing the same I did. If we don't lower our consumption, it's only going to get worse."

Next: Keep Your (Gas) Cool

AOL User A Master Touch Says:
"I use ETHOS Gas Reformulator. I went from 27 MPG to as much as 34 MPG mixed driving. You can google it. I also make sure I keep my tires properly inflated, and ONLY get gas early in the morning when it is cool, and put it in SLOWLY, only using the first position to hold it."

Next: Stuck at Home

AOL User Lindak411 Says:
"We will be listing our motor home for sale soon, since we can't afford the gas to put in it to go even short distances. Hopefully, we will be able to sell it, but it doesn't look good. I know in order to sell it we will have to take a big loss. We are retired, and bought an 11-year-old motor home with low mileage thinking maybe we could get away once in a while, but who knew the gas prices would go so high!!!"

Next: Brown Bagging It

AOL User Dominguez Fam Says:
"I have changed some habits. I no longer visit Starbucks for my morning designer coffee. I was spending about $35 a week there. I drive a Honda Civic, and that is almost a full tank of gas. This will get me to work and home for a week. I also take my lunch to work to save money. The high price of gas not only hits you at the pump, it also hits you at grocery stores, department stores and entertainment. Unfortunately, we can't go without gas."

Next: Taking It Slow

AOL User Shirleypark7 Says:
"I have reduced my speed to 65 mph to save gas on the freeway. I have noticed others are doing the same."

Next: Cruisin' Along

"I drive from Atlanta, GA to Chattanooga, Tenn. once a week to check on my parents. I set my cruise control on 68 MPH and I get 24 miles a gallon in my V8 engine Dodge Dakota. I used to drive around 75 and only got 15 miles per gallon on the highway. It certainly takes me a little longer to get there, but the savings outweigh the time."

Next: More Nap Time

AOL User Laughnow0702 Says:
"Prior to the $4.00/gallon fiasco, I had sold one of two 4-cylinder cars. Now I'm taking public transportation to work at least three days out of the five-day work week. It's frustrating, but what else is there to do? It has its benefits (nap time) and disadvantages (train broke down, had to walk about 4 blocks to catch another train then transfer to a bus)."

Next: Closer to Home

AOL User Mappingtime Says:
"I'm looking for something closer to home. I realized I was spending a huge percentage of my pay on gas for a job far away, which did not pay enough to justify the gas. So now I'm looking for anything that's closer. But I live way out in the middle of nowhere, so anywhere will take some gas."

Next: Too Many Jobs, Too Little Gas

AOL User Paneek1 Says:
"As an independent contractor, I have had to turn down jobs that are more than 50 miles from my home. I figure it would cost more to gas my work vehicles than I could make doing the job. The downside is I am not as busy as I normally am during the summer, hence I am making considerably less money."

Next: Bring Back the 1800s

AOL User CajnButyNH Says:
"Have openly discussed the possibility of going back to horse and buggy days!"

Next: Stop the Insanity

AOL User Laurell Says:
"My husband is in construction, and I am in real estate. We have to drive to make a dollar. I cannot believe it took my lifetime to go from $.35 to $1.65 and in 4 years it went up another $2.00. This is insane, our gasoline bill is now larger than our house payment."

Next: Better Mileage, More Respect

AOL User Stepdeck Trucker Says:
"Living in California, where we have the next-to-highest gas prices in the nation, I parked my gas-drinking V-10 Dodge pickup and brought out my two old Studebakers that have always gotten better gas mileage than any other vehicles I have ever owned ... People respect me more when I drive my older cars. They wave at me, and when I stop I always have people come over and make great remarks about my car and pickup."

Next: Cheap Groceries, Cheap Gas

AOL User Cdmoore757 Says:
"I purchased a BJ's membership last year with a friend and hardly used it because my family is pretty small (single mother), and I normally do not buy in bulk. I started to notice that BJ's, Sam's Club and Costco gas is about 15 cents cheaper than normal gas companies. Now I put that card to good use every time I fill up. It costs about $50 annually but it has since paid for itself after the 4th fill-up."

Next: Stranded on Land

"Well, I have made it. I have the boat that I always wanted. Oh, and don't forget the SUV to tow that boat, and then there is the wonderful Cadillac DeVille that I need because of a bad back. Well then I got cancer, lost my job, and the price of gas has gone crazy. So what is a person to do but endure it? I could not sell all of the items listed for enough money to by one Hybrid vehicle."

Next: Family Fun

AOL User Cmaehl Says:
"We've canceled all vacation driving plans. We'll do a STAY-cation instead. Thrifty hiking (or biking) with the family can be fun!"

Next: More From AOL

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