Tags: Gasoline | Price | Spikes | kloza

Oil-Price Expert Kloza: Get Ready for Wild Gasoline-Price Spikes

Tuesday, 07 February 2012 07:53 AM

Gasoline will hit $4 a gallon in the coming months due to seasonal factors, but some portions of the country could see chaotic spikes much higher, says Tom Kloza, chief analyst for the Oil Price Information Service.

Regular unleaded gasoline now averages $3.48 a gallon, up from $3.12 a year ago and $2.67 in February 2010, USA Today reports.

Prices will climb by 60 cents in May due to seasonal factors.

"I think it's going to be a chaotic spring, with huge price increases in some places," Kloza says, USA Today adds.

Expect a nationwide peak of $4.05 this spring, when increased driving and refinery trends result in higher prices.

Escalating tensions between the West and Iran are pushing up global crude prices, while refinery snags in the U.S. and closures elsewhere will also pressure prices upward.

"Higher demand, Iran, lost refining capacity are all potential problems," says Brian Milne of energy tracker Televent DTN, USA Today adds.

"We'll get over $4 a gallon, but it's going to be tough to sustain that level. People will drive less."

While tensions between the West and Iran are pushing prices up, concerns of an implosion in Europe are countering those sentiments.

A return to recession in Europe is a foregone conclusion for many, yet a messy string of defaults could exacerbate the situation and really pummel the economy, which would cut into oil demand.

"The global economy and energy markets are likely to see continued high volatility," says Shell CEO Peter Voser, according to The Telegraph.

"Both volatile macro and volatile earnings are now a fact of life for our industry," Voser says.

"We deal with this by staying focused on longer-term trends."

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