On April 21, 2006 crude oil for May delivery traded at a high of $75.35 a barrel. The early Spring runup in prices has been attributed to a number of factors, including continuing supply disruptions from the Summer 2005 hurricane season (18% of Gulf Coast Supplies were still off-line in Spring 06), supply disruptions from the changeover from MTBE to Ethanol, lingering concerns over Iran and Nigeria, and anticipation of higher summer demand. Many experts now believe that the near-stagnant world crude supply is not meeting ever-soaring demand, as witnessed by recent oil shortages in Africa and China. The Iranian situation is particularly troubling, as the possibility of an attack on Iran by Western powers looms due to their nuclear ambitions. Such an attack could create serious oil supply disruptions, because Iran sits on the eastern flank of the Straits of Hormuz, the channel in which almost all of the oil from the Persian Gulf flows through on tankers to industrialized nations. Iran could take measures to disrupt that supply if they are attacked. A blockage of the Straits of Hormuz would disrupt a significant percentage of world oil supplies, and could potentially send oil prices to $100.00/barrel or more, which would put gasoline in the $5.00/gallon range in the U.S.

Regular gasoline prices were averaging $2.92/gallon in a nationwide survey released by the AAA (Triple A) on April 24th. Many believe that $4.00/gallon gasoline is inevitable in Summer '06, especially if hurricanes are active in the Gulf again. Any attack on Iran could also cause a sharp spike in gasoline prices. As of May, 2006, $3.50/gallon gasoline is already being reported in parts of Florida, California and Hawaii.

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