We could soon be paying $5 per gallon for gas as Middle East tensions with Iran and Syria rise, and one chief oil analyst says it’s time to be prepared, according to AAA’s Daily Fuel Gauge Report.
As summer approaches, gas prices could hit $5 as demand for fuel rises, typically pushing prices up around 20 cents a gallon. And prices could rise another 50 cents a gallon or more, analysts say, if the Middle East diplomatic and economic standoff over Iran’s nuclear ambitions escalates into military conflict or there is some other major supply disruption.
“If we get some kind of explosion — like an Israeli attack or some local Iranian revolutionary guard decides to take matters in his own hands and attacks a tanker — then we’d see oil prices push up 20 to 25 percent higher and another 50 cents a gallon at the pump,” said Michael C. Lynch, president of Strategic Energy and Economic Research.
For the typical driver who pumps 60 gallons a month of regular unleaded gasoline, a 50-cent increase in price means an extra expense of $30 a month.
The prospect of such a price increase underscores the political and economic risks that Western political leaders must contend with as they decide how to address the Iran situation. A sharp rise in the prices of oil and gas would crimp the nation’s budding economic recovery. It would also cause big political problems at home for President Obama, who is already being attacked by Republican presidential candidates over gas prices and his overall energy policies, and for European nations struggling to deal with the continent’s debt crisis.
The U.S. Federal Reserve chairman, Ben S. Bernanke, told a House committee on Wednesday that rising global oil prices were “likely to push up inflation temporarily while reducing consumers’ purchasing power.” He maintained the Fed’s forecast that the nation’s economy would grow 2.2 to 2.7 percent this year.
The Iran situation has already raised the price of crude oil as much as 20 percent, according to oil experts. On Wednesday, the price of the benchmark American crude settled at $107.07 a barrel. That is about four dollars higher than on the same day in 2008. Later that year, oil and gasoline prices surged to new records, including a record nominal high of $145.29 a barrel for oil and $4.11 a gallon for gasoline in July.