Feb. 24, 2011— -- For the first time since 2008, oil hit $100 a barrel Wednesday before settling at $98.10 in New York trading.
If oil and gas prices continue to surge, it could not only hurt consumers but stall an economy that has been gaining traction after more than two years in the doldrums, economists warned.
Daniel O'Connell, vice president of energy at MF Global, said if gas prices continue to accelerate, by May, when "driving season" picks up, "it will cripple the economy."
The U.S. weekly average price of gas per gallon rose to $3.19, up 54 cents from a year ago, and slightly higher than last week's $3.14. This was the highest weekly price posted during the month of February since 1990, according to available data.
The most expensive regions for gas are again New England at $3.23 a gallon, and California at $3.56.
According to the AAA Daily Fuel Gauge, the state with the least expensive gas is Wyoming, at $2.98 a gallon as of Feb. 23.
Crude oil, meanwhile, surged another 5 percent Wednesday, after rising 9 percent Tuesday.
O'Connell said if crude oil does reach the brief high of $147 a barrel as it did in July 2008, then the price of gas could also average $4.11 as it did then. If that happens, he said consumers and retailers couldn't absorb the higher gas prices as they did three years ago.
What happens if gas prices go even higher?
"If gas goes to $5, it will cripple any recovery," O'Connell said. "People will be taking public transportation, road trips will be put on hold and flying will be a dream," warned O'Connell.
But O'Connell said he does not expect gas and oil prices to continue to accelerate for very long.
"Libya is too much of a wild card to say we are in a new range, but I suspect it will settle back down," he said.
As protests seemed to subside in Egypt, anti-government unrest continued in Bahrain and Libya. In a speech Tuesday, a defiant Gadhafi said he maintains control of the country despite the spread of anti-government protests from the city of Benghazi to the capital of Tripoli.
Unlike Egypt and Bahrain, Libya is a significant exporter of light, sweet crude, said Andrew Lipow, president of Lipow Oil Associates in Houston.
Most of that is exported to Europe: Italy, Germany, France and Spain. But it still affects the United States.
The U.S. imports 40 percent of its crude from Europe, refines it, and then exports the distillates back to Europe, including gasoline and diesel. So any disruption in Europe reverberates in the U.S.