From Newsmax

Gasoline prices at the pump have seen their strongest start to a new year since 2014 and reportedly have the potential to top $3 a gallon on average for the first time in six years.

At the start of 2020, prices averaged $2.58 and may climb from 35 cents to 75 cents a gallon, even without worsening tensions in the Middle East, Barron’s quoted Patrick DeHaan, head of petroleum analysis at fuel-price tracker GasBuddy.

On Friday, the U.S. average for regular gasoline was $2.64 a gallon, up 37.7 cents from a year ago, according to GasBuddy.

Oil slipped further towards $65 a barrel on Friday as tensions in the Middle East over Iran eased for now and investors focused on rising U.S. inventories and other signs of ample supply, Reuters said.

DeHaan’s forecast includes the potential for prices to rise above $3, and that could happen based on the typical “theatrics of seasonal spec gasoline changes and refinery maintenance,” DeHaan told Barron’s.

The U.S. government mandates the use of a more costly and more environmentally friendly blend of gasoline during the summer driving season, Barron’s explained.

Middle East tensions are a “bit of a wild card,” as they bring a “higher risk of violence spreading beyond the U.S. and Iran,” DeHaan says. “We’ve seen Iran go after oil infrastructure before, and that’s a primary risk that could occur again.”

Every $5-a-barrel increase in oil prices represents 10 cents to 15 cents a gallon more paid at the gas pump, Barron’s said.

Iran responded to a U.S. drone strike that killed a top Iranian general on Jan. 3 with a missile attack on Iraqi air bases hosting U.S. forces that left no casualties. But a Revolutionary Guards commander said Iran would take “harsher revenge” soon.

“Hostilities may have ended for the time being, but the longer-term risks of conflict have by no means vanished,” said Stephen Brennock of oil broker PVM.  “Set against this backdrop, the threat of supply disruptions in the Middle East is very much alive.”

Meanwhile, Bloomberg News reported that President Donald Trump’s decision to authorize the killing of an Iranian general and reignite Middle East tensions briefly roiled energy markets and underscored a U.S. political reality: Higher gasoline prices can tip elections.

The president, who is counting on a robust economy to win re-election in November and maintain Republican control of the Senate, is banking on record-shattering surges in domestic oil production to absorb any shocks unleashed by his moves on Iran. “We do not need Middle East oil,” he said Wednesday.

But Trump’s confidence belies U.S. refineries’ continued reliance on heavy grades of crude from the Middle East as well as warnings from oil analysts that renewed tensions — or a strike on energy infrastructure — could still pinch American consumers at the pump.

“Americans don’t pay close attention to foreign policy,” but “they do care about gasoline prices,” said Dan Eberhart, a Republican financier and chief executive of drilling services company Canary LLC. “The fear of gasoline prices spiking will make President Trump want to have a more muted military response to this Iranian situation.”

Any attacks designed to disrupt the flow of oil could drive up the costs of both crude and the gasoline refined from it, shaking up the politics of energy for Trump and his Democratic rivals. Moves in oil are often followed shortly by shifts in gasoline prices — and motorists frequently hold presidents and other politicians in power accountable for increases.

Analysts and energy executives aren’t expecting big price increases without a major escalation, because of weak demand and ample oil supplies, fed by a boom in U.S. production that cushions the country from disruptions overseas. Still, they are mindful that amid unpredictable conflict, any enduring increase sending gasoline above $3 per gallon could siphon votes from Trump in November while dampening enthusiasm for 2020 Democrats’ campaign promises to ban fracking for oil and gas and limit domestic energy development.

“High oil prices in an election year generally don’t help a president,” said James Lucier, the managing director of research firm Capital Alpha Partners. But traders aren’t expecting big, sustained price spikes, and “you would need to see $3 a gallon prices on a sustained basis until it becomes an issue,” Lucier said.

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