Tensions Raise Specter of Gas at $5 a Gallon HOUSTON - Gasoline for $5 a gallon? The possibility is hardly far-fetched. With no clear end to tensions with Iran and Syria and rising demand from countries like China, gas prices are already at record highs for the winter months - averaging $4.32 in California and $3.73 a gallon nationally on Wednesday, according to AAA's Daily Fuel Gauge Report. As summer approaches, demand for gasoline rises, typically pushing prices up around 20 cents a gallon. And gas prices could rise another 50 cents a gallon or more, analysts say, if the diplomatic and economic standoff over Iran's nuclear ambitions escalates into military conflict or there is some other major supply disruption. "If we get some kind of explosion - like an Israeli attack or some local Iranian revolutionary guard decides to take matters in his own hands and attacks a tanker - than we'd see oil prices push up 20 to 25 percent higher and another 50 cents a gallon at the pump," said Michael C. Lynch, president of Strategic Energy and Economic Research. For the typical driver who pumps 60 gallons a month of regular unleaded gasoline, a 50-cent increase in price means an extra expense of $30 a month. The prospect of such a price increase underscores the political and economic risks that Western political leaders must contend with as they decide how to address the Iran situation. A sharp rise in the prices of oil and gas would crimp the nation's budding economic recovery. It would also cause big political problems at home for President Obama, who is already being attacked by Republican presidential candidates over gas prices and his overall energy policies, and for European nations struggling to deal with the Continent's debt crisis. The Federal Reserve chairman, Ben S. Bernanke, told a House committee on Wednesday that rising global oil prices were "likely to push up inflation temporarily while reducing consumers" purchasing power." He maintained the Fed's forecast that the nation's economy would grow 2.2 to 2.7 percent this year. The Iran situation has already raised the price of crude oil as much as 20 percent, according to oil experts. On Wednesday, the price of the benchmark American crude settled at $107.07 a barrel. That is about four dollars higher than on the same day in 2008. Later that year, oil and gasoline prices surged to new records, including a record nominal high of $145.29 a barrel for oil and $4.11 a gallon for gasoline in July. In today's dollars, that would be $150.87 for oil and $4.27 for gasoline. Although prices plunged late in 2008 as the financial crisis took its toll and the recession deepened, that kind of sharp increase could happen again as summer approaches. "That's what frightens people," said Tom Kloza, chief oil analyst at the Oil Price Information Service. That fear is tempered by optimism - if tensions ease in the Middle East, experts predict that energy prices will fall, with gasoline at the pump potentially dropping 50 cents a gallon or more because supplies are relatively strong in many parts of the country. Some analysts say the world price of oil could fall to $80 a barrel if tensions eased. And there have been signs in recent days that Iran is feeling the pain of sanctions on its critical oil exports, perhaps increasing its willingness to negotiate with the West. On Wednesday, Tehran offered Pakistan, which has been suffering power shortages, 80,000 barrels of oil a day on an easy payment plan. It also offered to accept gold rather than dollars for payment from any dealers hoping to get around the Western restrictions on the usual financial channels for buying oil. And this week, Secretary of State Hillary Clinton told a Congressional committee that the administration was working hard to persuade India, China and Turkey, which represent more than a third of Iran's oil export market, to reduce their purchases. While all three countries have said publicly that they will continue to buy from Iran, Mrs. Clinton said, "in a number of cases, both on their government side and on their business side, they are taking actions that go further and deeper than perhaps their public statements might lead you to believe." Neal Soss, chief economist of Credit Suisse, said sustained high gasoline prices would definitely have an impact on the American economy. As a rule of thumb, a penny a gallon is worth a bit over $1 billion in consumer purchasing power if it is maintained a whole year. A dollar more would be something in excess of $100 billion, which is about the size of the Social Security tax cut. Despite a fall in gasoline demand in the United States and Europe, global oil markets are tightening because demand for energy from Asian countries, particularly China and India, is rising at surprisingly strong rates even as output is declining from several important producing countries. Gasoline futures are surging, spurred in part by recent refinery closings that may produce a shortage of motor fuel in the Northeast states by summer. Oil prices have surged about 8 percent since Iran threatened to cut off oil imports to France, Spain, Italy and other European countries three weeks ago as a pre-emptive move against Western moves to tighten sanctions. The European Union has decided to place an embargo on Iranian oil and ban shipping and insurance on its cargoes. Washington has decided on banking sanctions to curtail Iran's ability to earn money from its oil exports. Middle East experts express doubts that Iran will follow through on its threats to stop supplying European customers or close the vital oil sea lanes of the Strait of Hormuz. But the saber-rattling from both sides is encouraging investors to buy oil futures contracts at higher and higher prices. Rising conjecture that Israel could launch a pre-emptive strike against Iranian nuclear facilities has heightened market jitters. "The bankers are speculating, protecting themselves from higher prices by committing obligations to buy now, and that starts the ball rolling toward higher prices," said Sadad Ibrahim al-Husseini, former head of exploration and production at Saudi Aramco, the state oil company. He added that the escalating civil turmoil in Syria, a crucial ally of Iran, "is bound to increase price volatility and that will drive future speculation." The Japanese Foreign Ministry signaled on Wednesday that it was close to an agreement with Washington to further reduce shipments of oil from Iran, which have already declined about 20 percent since the beginning of the year. But any success in tightening sanctions on Iran could squeeze global oil supplies, pushing up prices and causing serious economic repercussions at home and abroad. "It's a bind for Obama," said Mr. Kloza at the Oil Price Information Service. How do you get tough on Iran without getting tough on American wallets?