Gas prices are doing that annoying thing they tend to do every couple of years: skyrocket to crazy, never-before-seen rates that cause headlines and panic at the pump.
But will we really see $5 a gallon gasoline?
"No. No, no, no," said Tom Kloza, chief oil analyst at the Oil Price Information Service, which provides research and investment information on the cost of oil. "$5 a gallon is an apocalyptic number ... It's not going to happen."
Gas prices tend to go up in the spring, and every once in a while something happens in the world that causes gas prices to spike. Sometimes a refinery stops producing or an oil-producing country gets a little selfish with its oil and stops exporting for a while. But mostly, Kloza says, it's money managers trading in oil futures who drive up gas prices.
The New York Times reported Thursday that $5 a gallon gas could be looming if tension in the Middle East keeps ratcheting up. Currently, the national average price is $3.73 a gallon. And gas prices tend to rise 20 cents a gallon in the spring, according to motor club AAA.
Disruption in the Middle East could add another 50 cents a gallon to gas prices, the Times reported. But that would still mean the national average would be around $4.50 a gallon, not the headline-grabbing $5 some are predicting.
"It's hyperbole," Kloza said.
Kloza says he's so confident we won't see $5 a gallon gas, he promised the folks at AAA that he'll wear a clown costume to their national meeting if he's wrong. Demand for gas is at a 12-year low, he said, down by 5 to 7 percent since last year, and U.S. gas consumption in January and February was at the lowest point since 2000.
Still, gas prices in some areas could go higher than $4 a gallon. Maybe a few places will see $5 a gallon, Kloza said, particularly rural spots or hard-to-reach spots like Martha's Vineyard. This will make local TV stations happy, as they plant correspondents in front of gas station signs and make dire predictions about the economy and the price of fuel.
Car owners tend to panic when gas prices rise. When their receipts jump from $50 fill-ups to $70 or $80 fill-ups, many people decide to dump their current car and trade in for something more fuel efficient.
But buying a more fuel-efficient car during a spike in gas prices is one of the worst possible times to make the switch. Dealers know you're looking for something more fuel efficient, so they tend to stop negotiating. The price of hybrid cars, like the Toyota Prius or Ford Fusion hybrid, have been known to spike above sticker price because dealers know they can charge more.
Inevitably, over time gas prices will keep going up. If you subscribe to prevailing scientific theory that there is a limited amount of oil buried under the ground worldwide, supplies will deplete and the price will rise (prices will almost certainly rise even if you don't believe it). But vehicle fuel economy is also on the rise: The University of Michigan Transportation Research Institute says the average vehicle got 23 mpg in February, up from 20.5 in October 2007.
So take a deep breath and stay in your current vehicle until spring. Wait until gas prices go down a bit before trading in for that gas-sipping car you have your eye on.
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