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$5 a gallon for gas? Get ready, experts say

Updated: September 24, 2012 6:25AM

If gasoline prices approaching $4 a gallon are draining your wallet, brace yourself. Oil industry experts say gas prices could hit $5 a gallon — possibly before summer.

Blame the war in Libya and continuing unrest in other parts of the Middle East and North Africa, experts say.

The region produces 27 percent of the world’s oil.

Libya, which sits on the largest oil reserves in Africa, has almost totally stopped petroleum shipments as rebels battle troops loyal to Col. Moammar Gadhafi. The addition of international forces, including the U.S., could mean that the country will be embroiled in a protracted conflict that could keep oil fields offline much longer than previously expected, energy experts said.

In Yemen, embattled President Ali Abdullah Saleh pledged to step down more than a year early, but his refusal to leave immediately infuriated tens of thousands of demonstrators. Yemen is an important transfer point for global oil supplies.

“It’s creating a situation where we could see the price of oil go up to $150 a barrel and gasoline toward $5 a barrel,” said Phil Flynn, an oil industry analyst with Chicago-based PFGBest.

Prices are likely to be steeper in the city than other regions, Flynn said.

“In Chicago, the odds are higher because the summertime blends of gasoline are more expensive,’’ he said. “Our taxes are higher. So it is more likely that it’s going to happen here before it happens in other parts of the country.”

“Expect $5 a gallon gas by Memorial Day,” said Bob van der Valk, fuel price analyst with 4Refuel Inc., a Canadian fuel management firm.

When you also factor in the earthquake and tsunami in Japan, you have “the perfect storm” that will push prices up, he said.

The average price of unleaded regular gasoline in Chicago was $3.75 a gallon Tuesday, up 69 cents from a year earlier, according to AAA, Wight Express and the Oil Price Information Service. It’s 38 cents a gallon higher than a month ago. At some locations in the city, prices already are above $4 a gallon, according to

Nationally, the average price is $3.55 a gallon — and rising.

“It’s going to be $4, the average price, within the next two weeks with everything that’s going on in Libya,” van der Valk said.

U.S. pump prices will eventually hit record highs, he predicted.

According to AAA, $4 gas prices haven’t been seen since 2008. Alaska holds the record for an average high of $4.69 reached July 24, 2008, according to the auto club.

Oil prices, which have spiked in the last month, pushed as high as $105.18 a barrel Tuesday. At the close of the day, crude settled at $104.97 a barrel, up $1.88.

Van der Valk noted that crude is up about $6 a barrel from Friday. For every $1 increase in the price of crude oil, drivers can expect a 2œ- cent increase in the price of gasoline and diesel fuel, he said. The increases in crude oil prices over the past weekend have not yet been passed along to consumers at the pump, he said.

The spike in oil prices is making it more costly to travel by air. United and Continental airlines are raising fares on many U.S. routes $10 per round trip, a spokesman for the airlines confirmed Monday.

U.S. airlines have raised fares at least six times this year as they try to offset rising jet fuel costs. The last attempt failed when other airlines decided not to follow American Airlines when it raised prices earlier this month, also by $10 per round trip. Cheap seats will be harder to find this year, said Rick Seaney, chief executive officer of travel website

Contributing: AP

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