The national average for a gallon of regular is about $3.50 right now. That’s significantly below the highest ever (yet) price of $4.11, hit during the summer of 2008. Nonetheless, 2011 was the overall priciest year ever for gasoline, and the most expensive January ever for gas is the month that just passed by. Many experts anticipate prices will top $4 by springtime, and those seem to be the experts who are playing it safe with their estimates.
During the typical January, gas prices drop. Cold weather tends to keep drivers indoors, and the need to pay off holiday season splurges tends to keep consumers off the roads to trim fuel expenses. Together, these forces add up to a decline in both the demand and price for gas.
This year, the story is different. As the Los Angeles Times reports, the average price for a gallon of regular was $3.37 in January. Previously, the highest average price for January was $3.09, in 2011. Prices don’t seem to be leveling off, either: AAA’s Fuel Gauge says the national average on Monday stood at $3.480, up from $3.366 one month ago.
If events proceed as the consensus of experts expects, increases in seasonal and global demand will cause gas prices to creep up to $4 a gallon by summer or early spring. Here’s one analyst’s take, per USA Today:
“I think it’s going to be a chaotic spring, with huge price increases in some places,” says Tom Kloza of the Oil Price Information Service.
Kloza predicts a national average that peaks at $4.05, and he and others say that in New York City, Washington, California, Hawaii, and other spots where gas prices are typically much higher than the U.S. average, prices may top $4.50.
All of these forecasts, though, don’t factor in the possibility that the Middle East could make a chaotic spring even more chaotic. The Gas Buddy blog highlights some recent interviews with U.S. Defense Secretary Leon Panetta, in which Panetta discusses the likelihood of Israeli air attacks on Iran. If those attacks happen, it’s not crazy to anticipate the price of oil quickly doubling, surpassing $200 a barrel.
GasBuddy estimates how such a price hike would translate at the pump:
So if you’re seeing $3.50 a gallon in your local market and Israel attacked today, add $2.50 to that and now we’re looking at $6 gasoline.
If Israel instead took action in the spring, at which point gas prices are already expected to hover around $4 regardless of strife in the Middle East, then prices would go even higher:
If an attack occurs at that time and you add the same $2.50 increase that reflects crude oil at $200 per barrel, then — as incredible as it sounds– if Secretary of Defense Panetta’s intelligence report is correct, your gasoline would be $6.50 per gallon.