As gas prices continue to climb above the $4 mark in Ventura County and other parts of Southern California, analysts say drivers should prepare to fork over even more bucks in the weeks ahead.
The price for regular unleaded gasoline in Ventura County was $4.06 a gallon on Monday, up 19 cents from last week, according to data from the Auto Club of Southern California. California and Hawaii had the highest average price for regular gas, at $4.03 and $4.23, respectively. Wyoming had the lowest average price, $3.04 for regular.
Analysts said strained relations with Iran, fear of a supply shortage and refineries shutdowns for maintenance are playing into the price surge.
"We already had an early start to the spike, but the worst is yet to come this week," petroleum industry analyst Bob van der Valk said Monday. "About two weeks ago, I said price would increase to $4.25 by Memorial Day, but it will easily reach that even before then. We might be at $4.50 by the Fourth of July."
Oil prices jumped to a nine-month high of above $105 a barrel Monday after Iran said it had halted crude exports to Britain and France in an escalation of a dispute over the Middle Eastern country's nuclear program. Iran exports about 3 percent of the world's oil.
Iran's oil ministry said Sunday it had stopped crude shipments to British and French companies in an apparent pre-emptive blow against the European Union, after the bloc imposed sanctions on Iran's fuel exports. They include a freeze of the country's central bank assets and an oil embargo set to start in July.
The immediate increase in prices, however, is not caused by a shortage in supply but a fear of possible shortages, said CSU Channel Islands economics professor Sung Won Sohn.
He said Britain and other European countries would be able to find other sources by reshuffling supply. The fear of supply disruptions, however, causes buyers to overpay, creating the volatile price swings.
"What's affecting the crude oil price is the psychology and expectation," Sohn said. "What the market is reacting to is the fear of supply shortage as opposed to an actual shortage. If you look at the spike in oil prices in the past year, a lot of it has been related to the fear and not actual supply disruptions. Psychology, to some extent, matters more."
In addition to the geopolitical turmoil, several refineries in the U.S. have been down for maintenance, said AAA spokeswoman Marie Montgomery. Although the temporary shutdown is not unusual, it was scheduled during an inopportune time given the volatile situation in the Middle East.
"The maintenance is not unusual, but it has caused enough of a supply issue that we are having to get our products in the spot market," Montgomery said. "Buyers from the mom-and-pop gas stations to airliners have contracts out there with suppliers, but if they are not already locked into a contract, they have to rely on buying on the spot market, where prices are set at today's prices, which is high right now."
A fire at BP's Cherry Point refinery in northwest Washington also has caused supply problems, van der Valk said.
The fire broke out Friday and it was unclear how long the refinery will be out of service, BP officials said. The refinery, a big West Coast supplier, processes about 230,000 barrels of crude oil every day.
As crude oil prices continue to rise and motorists dig deeper into their pockets, the hope for a faster economic recovery could be stymied, Sohn said.
"Every dollar increase in the price of crude oil is a tax on consumers," he said. "It does and will slow economic growth and keeps financial markets volatile."
This article contains material from The Associated Press.