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A government report released this morning, in fact, forecasts that drivers can expect to pay 25 cents more per gallon this summer than they did during last year's summer driving season. According to the government's Energy Information Administration, consumers should brace themselves for $2.62-a-gallon gasoline this summer. That represents a 14 percent jump from prices at the pump at this time last year. The government's estimates are based on predicted crude oil prices of just under $66 a barrel this summer.
Of course, many believe that the government may be understating expected prices at the pump. For starters, in many parts of the country, gasoline prices are already above $2.62 a gallon. And some analysts think the government's forecast for oil prices this season may be conservative. Indeed, futures contracts for crude oil prices are already priced well above the government's prediction.
In early trading Tuesday, crude oil was nearing the $70-a-barrel level. Prices have begun to climb back up in recent weeks for several reasons, including heightened geopolitical concerns. Many commodities traders, for instance, fear instability not just in Iraq but now in Iran. In recent days, reports that the United States is not ruling out a possible military strike against Iran—to slow that nation's efforts to develop nuclear capabilities—have roiled the energy markets.
But Iran is only part of the picture. Oil and gasoline prices are just as likely to be spooked if this year's hurricane season along the Gulf Coast picks up where last year's devastating season left off.
