$4 Gas? Some Fear Iran Crisis Could Jack Up Prices

March 30, 2007 — Nothing moves the price of gasoline more than the price of oil, and fears that the standoff over Britons held captive in Iran will lead to a major disruption in the supply of Middle East oil is taking an escalating toll on gas prices here in the United States.
At many gas stations in San Francisco today, the cost of filling up was well over $4 a gallon.
San Francisco may have the most expensive gas in the country, but prices are rising all over. In the last eight weeks, even before the current standoff with Iran, prices jumped 44 cents to a national average of $2.61 a gallon — 11 cents higher than a year ago.
Gas prices often shoot up in the spring, as refineries make the switch to summer-blend gasolines, creating glitches in supply. But the standoff with Iran has inflicted a double whammy on prices.
"I believe crude oil prices are going to continue to rise 50 cents to $1 each," said John Kilduff, an oil trader for Fimat USA, "and every day that this goes on until they stabilize at some point above $70 a barrel."
For now, consumers are grousing, but most seem not to be driving any less.
"At this point," said Mike Pina of AAA, "a lot of Americans are saying, 'Prices are high, but I've seen higher,' so they are not at the point yet where Americans are starting to change their travel plans."
Many consumers seem to be resigned to a new normal of higher and fluctuating gas prices.
Economists say a national average of $3 a gallon is probably the tipping point where driving habits change.