It’s looking like another rocky year ahead for US motorists in hope of respite against rocketing gas prices. As it stands, the New Year has brought along little more than the most expensive January prices at the pumps in recorded history and things aren’t looking much brighter for the months to come.
In fact, some industry analysts have warned America to brace for prices of $5+ per gallon as the weather begins to improve.
According to motorist group AAA, the national average price for a gallon of regular gas hit $3.39 this Monday – a huge leap of over 30 cents from the same months last year and a new record-high. The highest national average gas prices have even been in the US is $4.114 per gallon in July 2008, though it’s looking like this is one record that will be cannon-fodder in 2013.
Cold comfort as it always is, experts across the country have weighed-in with their own explanations as to why gap prices are so high an continue climbing by the day. And for the most part, one of the largest points of consensus is the positive news that the nation as a whole appears to be showing signs of economic recovery, which unfortunately happens to be a known driver of higher gas prices.
In addition, the looming threat of further conflict with Iran has seen crude oil prices rally significantly over the last few weeks. Iran’s threat to shut-down the Strait of Hormuz has the potential to cripple oil supply to the West, with the Strait having accounted for over 17 million barrels of oil traversing the stretch every day in 2011 – a fifth of the world’s total supply of traded oil.
“The potential surrounding the Iranian situation is much worse than Libya,” said GasBuddy.com‘s senior petroleum analyst Patrick DeHaan this week.
“The stakes are much higher.”
The really bad news for American motorists however is that all of the above pales in comparison with the stark threat of even higher gas prices on the horizon, with further spikes expected before any signs of improvement filter through. Along with growing geopolitical risks, various other factors including demand from emerging markets could see the value of oil skyrocket like never before.
Demand in the US is as a whole still relatively tepid, though domestic refineries have stepped up international exports of gasoline where ever-growing demand is seeing prices go nowhere but up, according to IAF Advisors research director Kyle Cooper.
“The U.S. consumer is competing with the emerging market consumer, namely Brazil, China, and India. You throw on top of that the fear of anything happening with Iran, and most likely prices are not going to come down significantly in the next few months,” Cooper advised on the imminent outlook.
On a positive note however, he did also go on to paint a slightly less forboding picture of gas prices to come, projecting a national high of no more than about $3.50 per gallon this summer.
According to GasBuddy.com, the figure is more likely to be around the $3.95 per gallon mar as early as May.