'Astronomical' Surge in Gas Prices Feared

With violence and instability spreading through critical Middle Eastern countries, some financial analysts are warning that the price of crude oil could top $220 a barrel. Crude futures hit $97.97 in New York today, the highest in more than two years.

“If Libya and Algeria were to halt oil production together, prices could peak above $220 a barrel and OPEC spare capacity will be reduced to 2.1 million barrels a day, similar to levels seen during the Gulf war and when prices hit $147 in 2008,” Nomura Holdings, a Tokyo-based bank, warned today.

The flow of oil from Libya, Africa's third-biggest supplier of oil, is threatened by the uprising there and the vow of Libyan leader Muammar Qaddafi to fight until his “last drop of blood.” Protests are also widespread in Algeria.

Nomura said the $220 prediction may be too conservative, as speculative investors trading crude oil who were not active in the early 1990s may amplify the price gain in the event of an export halt.

The average national price of gasoline in the U.S. Is currently about $3.19 per gallon, according to the U.S. Department of Energy. That's about 54 cents higher than a year ago.

Auto dealers are bracing for a marked increase in the demand for smaller cars, crossovers and hybrids. The rising gas prices are also affecting used-car prices, making it harder for dealers to sell large SUVs and gas-guzzling full-sized sedans.

While some dealers may have trouble getting enough fuel-efficient vehicles to meet the demand, others – like Hyundai and Kia dealers – are expecting a continued sales boom. One Hyundai dealer in Alabama told Automotive News he sold three Kias yesterday to customers who traded in two Chevrolet Tahoes and a Ford F-150 pickup.

Some dealers say consumers aren't reacting as rapidly this year as they have in the past.

“Four dollars used to be the panic mode and that's not going to motivate people in and of itself," a Los Angeles area dealer said. "I don't think $3.90 or $4.05 is going to make people panic."