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+ - The Specter of Gasoline at $5 a Gallon

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Hugh Pickens writes
Hugh Pickens writes writes "The NY Times reports that gas prices are already at record highs for the winter months — averaging $4.32 in California and $3.73 a gallon nationally and as summer approaches, demand for gasoline rises, typically pushing prices up around 20 cents a gallon, but gas prices could rise another 50 cents a gallon or more, analysts say, if the 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 — than we’d see oil prices push up 20 to 25 percent higher and another 50 cents a gallon at the pump,” says Michael C. Lynch, president of Strategic Energy and Economic Research. A sharp rise in the prices of oil and gas would crimp the nation’s budding economic recovery would 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. On the other hand, environmentalists see high gas prices as a helpful step toward the development of alternative energy. Secretary Treasury Steven Chu notably said in 2008 "we have to figure out how to boost the price of gasoline to the levels in Europe" to make Americans trade in their "love affair with the automobile" for a marriage to mass transit. In the meantime President Obama is in a bind because any success in tightening sanctions on Iran could squeeze global oil supplies, pushing up prices and causing serious economic repercussions at home and abroad. “How do you get tough on Iran," asks Tom Kloza, chief oil analyst at the Oil Price Information Service, "without getting tough on American wallets?”"
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The Specter of Gasoline at $5 a Gallon

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