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NEW YORK (
DailyFinance) -- Most U.S. motorists know what's probably coming this summer to a gas station near them: scorchingly high gas prices.
Intensifying civil war in Libya has already cut that nation's oil exports to about 25% of capacity, pushing crude prices above
$105 per barrel -- triggering a quick 40-cent increase in the average U.S. price for regular unleaded to $3.50 per gallon.
However, that price may look low for the rest of 2011, for two reasons: 1) the risk premium that institutional investors are paying on oil futures because of concern that the unrest could spread to Saudi Arabia or Iran; 2) the U.S. summer driving season, during which gasoline demand rises, enabling both oil companies and local gas stations to raise prices without risking a decline in customer traffic.
So, until political stability returns to the Middle East, this summer's average U.S. gas price will likely exceed the record near $4.15 per gallon set in the summer of 2008. And in higher-cost metropolitan areas such as Los Angeles, San Francisco, New York and Boston, gasoline could approach $5 per gallon for super unleaded by the Fourth of July.
If popular uprisings seeking regime change hit the major oil exporters of Saudi Arabia or Iran, let's just say U.S. gasoline prices are going to hit truly head-spinning levels.
If You Can't Beat 'em, Profit From Them
How can U.S. motorists cope? You can wait for Congress to pass an energy policy that encourages fuel efficiency and that weans the nation off oil. But don't hold your breath: Any such bill is a nonstarter with the Republican Party controlling the House. (The GOP may, however, favor a temporary suspension of the 18.4-cent federal gas tax -- a modest money-saver, but every reduction helps.)
If you haven't already made the switch, now may be a good time to consider a higher-MPG car or SUV, even if it's a used vehicle. All other factors being equal, a switch to 25-mpg vehicle from an 18-mpg vehicle will reduce your gas consumption by about 30%.
Here's another way: Consider investing in an oil play.
If you can't tolerate the higher risk associated with owning individual stocks, go for an oil-industry-related mutual fund or exchange-traded fund, as
DailyFinance'sMatthew Scott has outlined. However, if you can tolerate such risk, you may fare better with some individual stocks.