Gas prices begin climb toward $4.50 a gallon, experts say
Gas prices could hit $4.50 a gallon nationwide by summer because of sanctions on Iran, a frigid winter in Europe, and logistical challenges in the US. The current all-time high is $4.11.
Many drivers are already grumbling at gas prices this winter. But by this summer, Friday's AAA average of $3.58 a gallon for regular gasoline may look downright attractive.Skip to next paragraph
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Some energy analysts think gasoline on a national basis could climb into the $4.50 a gallon range. That would be above the all-time peak of $4.11 a gallon set on July 14, 2008. In some states such as California, Hawaii, and Alaska, prices are normally higher and could get closer to $5 a gallon.
“We are on track for a very expensive summer,” says Sander Cohan, a gasoline-market analyst and principal at Energy Security Analysis, Inc. in Wakefield, Mass.
During the past two weeks, the price of crude oil on the international markets has risen by $7 a barrel to about $120 a barrel, in large part because of uncertainty over Iran, which has threatened to disrupt oil supplies because of a tightening financial noose around it.
“All that has to happen is for a tanker to hit a mine and the prices will be jumping,” says Mike Breard, an oil and gas analyst at Hodges Capital in Dallas. “A lot of people are afraid of oil rising to $140 a barrel.”
Every $1 rise in the price of oil ultimately results in an increase of 2.4 cents a gallon at the pump if the price stays up.
Last May, prices peaked at $3.97 a gallon after the price of gasoline rose 80 cents a gallon after February. That run-up was caused after the civil war in Libya reduced oil supplies and then flooding on the Mississippi River resulted in unexpected refinery outages.
If prices do rise this summer, Mr. Cohan says the causes are quite different and somewhat paradoxical. For example, because demand for gasoline has been low, two major refineries in the Philadelphia region have been shut-down, as has a large Hess oil refinery in the US Virgin Islands.