Prices could spike another 60 cents or more by May. “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 expects average prices to peak at $4.05, although he and other industry trackers say prices could be sharply higher in some markets.
Rising prices are an annual spring ritual, largely because of seasonal demand.
Refiners also switch from winter formulations to more expensive seasonal formulations to meet stringent environmental standards, which can tack on 15 cents a gallon, says Brian Milne of energy tracker Televent DTN.
So far, $4 a gallon has proven to be the upper limit consumers will pay. Last April, national prices peaked at about $3.98 a gallon. In 2008, a sharp run-up ended when prices hit an all-time average of $4.11 a gallon that summer.
“Higher demand, Iran, lost refining capacity are all potential problems,” Milne says. “We’ll get over $4 a gallon, but it’s going to be tough to sustain that level. People will drive less.”
Energy analyst Patrick DeHaan of price tracker Gasbuddy.com expects prices to rise to about $3.55 a gallon by the end of February and peak around $4 by Memorial Day weekend.
“You could see prices in Chicago, Los Angeles, New York, Washington and other major metropolitan areas at $4.60 or higher,” DeHaan says. “There’s definitely a limit how much it can go up. But the overall trend does remain higher.”
Lisa Margonelli, author of Oil on the Brain: Petroleum’s Long, Strange Trip to Your Tank, says, “The increase in gas prices last year sucked $100 billion out of the economy,” she says. “We aren’t going to get a break because there is no long-term grand strategy to keep prices down.”
Author: Gary Strauss, USA Today