$3 Gas On Horizon This Summer?

If you've bought gasoline in the last few days knows, you know that prices at the pump are on the rise again.

Trilby Lundberg, publisher of the Lundberg Survey of 7,000 gas stations, told CBS Radio News the average price of all grades combined is up nearly 15 cents over the last two weeks, to $2.52. That's 40 cents higher than last year at this time.

Tom Kloza, an oil analyst for the Oil Price information Service told The Early Show co-anchor Rene Syler Tuesday, "This is pretty much typical for this time of year. It seems a little worse because we're starting from higher numbers.

"But, generally, wholesale prices go up by about 55 percent from, let's say, mid-February to late May — and, as bad as this may seem, we haven't gone up that much right now. I'm afraid this may be the last time you see $2.50, or less than that, for about five months."

Are we looking at $3 a gallon gasoline this summer?

"I don't think we are, unless there's a calamity," Kloza says. But, he warns, "there's a pretty good chance for some calamities this year. This is going to be the summer of hurricane fears, the summer of hurricane worries.

"Oil prices are established by traders, they're established by speculators, and they're established by people who react to fear. And there's no question that this spring and summer is going to be a summer of fear about the tropics. So, I think, without any hurricane impacts or anything geopolitically in Iran, Nigeria or Venezuela, we're looking at $2.50 to $2.75 on average for the next five months.

"If we get an event, that brings $3 and all the other numbers into play. An event would, of course, be a tropical system making landfall near (oil-producing) hardware," or a problem in any of the major oil-producing nations.

"A lot of the gasoline price and a lot of the crude oil price is established by the investment community," Kloza explains. "The investment community is worried about a geopolitical hot spot. It's also worried about refineries breaking down, because we really have no margin of error.

"That investment community is not likely to be selling, particularly since the real peak driving season in the days where we use 9.5, 9.6 million barrels a day is well ahead of us. It's going to be a tough period to go through."

What can we do to help reduce the impact on our pocketbooks?

"Everyone should realize there's really no downside to conservation," Kloza said. "You might not necessarily need to cancel your summer vacations. You probably should take them.

"Measured in personal disposable income, gasoline is still pretty much a bargain, but pay attention.

"I think if you can cut back a little bit, that's a prudent measure, whether we're talking about gasoline or we're talking about appetite for other things. There is a lot of excessive consumption out there. It holds true in gasoline and holds true in a lot of other elements."