Gasoline soared past $4 a gallon in Santa Rosa over the holiday weekend and is expected to keep going up, experts said Tuesday, citing tension over Iran and rampant financial speculation as culprits in the consumer pain at the pump.
A gallon of regular gas averaged $4.02 on Tuesday, up 18 cents in the past week and 33 cents more than a month ago, according to the AAA Fuel Gauge Report.
Prices are the highest ever for this time of year and are expected to rise, possibly breaking the four-year-old record of $4.55 a gallon later this year, experts said.
"It feels like we could easily creep over $4.50," said Robert Eyler, a Sonoma State University economist. The $4.75 mark is "not unreachable," he said, and price spikes could hit $5, especially in metropolitan areas like Los Angeles and San Francisco.
Matt Skryja, an AAA spokesman, said he was reluctant to forecast a specific price. But if current trends continue, "we would be flirting with that record," he said.
Crude oil prices settled above $106 per barrel Tuesday on the New York Mercantile Exchange, the highest price since May, driven by Iran's weekend announcement that it would stop selling oil to Britain and France.
The move was largely symbolic — one analyst called it "a big head fake" — since the two nations buy little Iranian oil.
But concerns about Iran, the world's third-leading exporter, continued to pressure crude oil prices, especially with financial speculators piling into the market.
"Speculation is now part of the DNA of oil prices. You cannot separate the two any more," said Fadel Gheit, a 30-year veteran of energy markets and an analyst at Oppenheimer & Co.
Investors start buying oil futures when they believe the price will go up due to factors like geopolitical tension, Eyler said.