Why Gas Prices Aren't Likely to Hit $5 This Summer
CNBC Senior Commodities Correspondent & Personal Finance Correspondent
Predictions that gas prices will rise to $5 a gallon or higher by Memorial Day are running rampant.
Nationally, the average price for a gallon of regular gasoline has jumped nearly 30 cents in the past month to $3.76 a gallon, according to AAA.
A spike to $5 a gallon for the national average by the summer would mean that the rise in gas prices over the next few months would have to exceed the 8 percent climb we've seen over the past four weeks.
Is it possible? Perhaps. Inevitable? Not really.
"There's nothing inevitable about it," says IHS chief economist Nariman Behravesh, speaking on the sidelines of the CERAWeek Energy Conference in Houston. "To a large extent it depends on what happens in the Middle East."
If tensions between the West and Iran escalate further and result in a supply disruption from OPEC's second largest oil producer, then oil prices (Brent crude futures , specifically) could spike $30 to $40, Behravesh says, and gas prices could hit $5.
"But that's about a 20 percent scenario," he says. "The most likely scenario is that we get to $4.25 a gallon in the peak driving season."
Prices are already at $4.25 a gallon or higher in some parts of the country.
The statewide average price for a gallon of regular gasoline in Alaska, California and Hawaii has topped the $4 mark. Gas prices in Connecticut, New York and Washington, DC are almost there too.
Some stations in the New York City area are charging nearly $5 a gallon for premium gas. Some Florida drivers are reportedly shelling out almost $6 a gallon.
But at under $3.25 a gallon, gas prices in Colorado, Wyoming and other mid-continent states helping to reign in the national average.
Plus, gasoline consumption continues to fall at a dramatic pace. Last week, the four-week average for U.S. retail gasoline demand posted a year-over-year decline for the 49th straight week, according to a report from MasterCard SpendingPulse, falling nearly 6 percent compared to the same period in 2011.
Even former Shell CEO John Hofmeister, who has forecast gas prices will hit $5 by the end of the year, has qualified his assertion, saying there's only a "better than 50 percent chance" of gas prices hitting that mark.