$5 Gas? Don’t Rule It Out

$5 for a gallon of gasoline? It might yet happen.

A series of factors have already pushed gas prices to a record high for the winter months, with rates averaging $4.32 in California and $3.73 a gallon nationally by Wednesday. And, with summer not so far away, gasoline prices could be set to rise again – the warmer months typically see gas prices go up by around 20 cents a gallon.

Meanwhile, the confrontation with Iran could see gas prices shoot up a further 50 cents a gallon or more, assuming the standoff tips into military conflict. According to Michael C. Lynch, president of Strategic Energy and Economic Research:

“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 — than we’d see oil prices push up 20 to 25 percent higher and another 50 cents a gallon at the pump.”

Indeed, the Iran situation has already pushed the price of crude oil up by as much as 20 percent, according to oil experts. Late on Wednesday, the price of the benchmark American crude settled at $107.07 a barrel, almost four dollars higher than on the same day in 2008.

A rise in oil and gas prices would not be good news for the U.S.’s budding economic recovery, or for President Obama in an election year. Obama’s energy policies are already a focus of Republican attacks, and further rises would ensure these intensify.

If the standoff in the Middle East becomes less fraught, many experts predict gasoline could fall as much as 50 cents a gallon at the pump.

Right now, however, tensions are high, with Secretary of State Hillary Clinton confirming to a Congressional committee that the Obama administration was attempting to persuade India, China and Turkey, which represent more than a third of Iran’s oil export market, to reduce their purchases of Iranian oil.

As oil prices have flown up about 8 percent since Iran threatened to cut off oil imports to various European countries three weeks ago, it could all add up to a very pricey summer for drivers and other big gas consumers in the west.

Would a $5 per gallon price force you to reconsider the amount you drive?