One major driver behind gasoline prices will be Iran, who threatens to retaliate against Western embargoes of its oil imports by closing the Strait of Hormuz, which allows for the passage of as many as 20 million barrels of crude oil a day on tankers. There is a roughly 96% positive correlation between gasoline and crude oil prices.
NEW YORK ( TheStreet) -- Gasoline prices could spike high enough this summer to significantly rattle consumer confidence and further depress an already sluggish U.S. home sales market.
Tim Evans, Citi futures perspective energy analyst, says that retail gasoline prices could breach the $4 spike achieved in 2008, if Iran were to make any major moves of this nature. "We are very concerned about the role that Arab Spring subsidies to stop revolts in countries with monarchies, and ... Iran could play beyond underlying demand," adds Swonk. "If gasoline were to rise to around $4 a gallon by April or May, then I believe ... consumer spending would come in below trend, as disposable income gets squeezed," said Michael Feroli, JPMorgan's chief U.S. economist. The shuttering of various European and U.S. northeast refinery operations of late due to unfavorable margins and a difficult lending environment could also eventually lead to supply-constraint driven gasoline price spikes when demand starts to pick up again towards the summer peak driving season period, say analysts. "We should be aware that the import situation going forward is also going to take a big hit into this year," cautions Oil Outlooks and Opinions president Carl Larry. "Europe is fading fast and that should give