As the average gas price nationwide climbs towards $4 a gallon, analysts and energy experts are forecasting that prices could hit the $5 mark at the pumps this summer.
Crude prices surged last year, causing prices at the pump to shoot up. This time around, however, gas prices are climbing similarly, but the price of crude is lower.
Tensions with Iran, rather than supply and demand, may be the reason gas prices have been consistently climbing, but what has yet to be seen is the impact that this will have on the economy and the country on the whole.
Mad Money’s Jim Cramer believes prices will not stop rising until the US reaches an understanding with Iran. “I believe $5 gas could set the whole economy back. While I know natural gas can bring the price down longer term if it is embraced by Washington, nothing can roll the price of oil back except for one movement by Iran to stand down from their nuclear program.”
While on Squawk Box, Dan Yergin of Cambridge Energy Research Associates, called the climbing prices at the pump “a drag on an economy that is supposed to be poised to recover.”
Former Shell Oil CEO John Hofmeister also considers oil demands from India and China a factor in the price climb. While the US is producing more oil than before, “on a global basis,” Hofmeister said in an interview with Squawk on the Street, “I’m afraid we face a continuing onslaught of prices creeping even higher.”
Politicians, such as Senator David Vitter of Louisiana, urge that President Obama should not immediately tap into the Strategic Petroleum Reserve to halt the price increase. Vitter said that it should be used only in the event of emergencies and national defense concerns.