Look out Chicago! DeHaan predicts $4.60-$4.95/gal. LA: mid-to-upper $4.00.

“Bigger cities will always have higher prices due to higher gas taxes and the cost of doing business,” DeHaan said.

Could be worse.

Despite the possibility of record high gas prices this spring, Rozell says things could be worse. “Over the last 10 years, we have tended to see a 75% increase in prices from the winter low to the spring peak. This year, we are only forecasting about a 40% rise because of bearish economic news.”

Here are some forecasts for the coming year:

Head of commodities research at Citigroup Global Markets Inc. says gas may rise over $4 next summer

Tom Kloza at OPIS says prices could rise a high as $3.75-$4.50.

The federal EIA is a little more optimistic, predicting more like $3.45.

Two weeks ago, debate over these new sanctions on Iranian oil prompted to government in Tehran to threaten to close the Strait of Hormuz. The threat was promptly backed up by a 10-day series of war games and the tests of some new weapons system.

The Iranian government has yet to respond to this latest news, but this move by the EU is sure to increase tension even further.

Despite this, the US military remains unfazed. An official statement from the Pentagon today stated: “These are regularly scheduled movements in accordance with our longstanding commitments to the security and stability of the region and in support of ongoing operations.”

The escalating tensions in Iran have led directly to higher oil prices in the past several days. The Financial Times notes that “the latest comments from Tehran sent Brent crude, the global benchmark, 3.5 per cent higher to $111.35 for the first time in three weeks.”

Again, to stress the importance of the Strait of Hormuz:

The Strait of Hormuz is a narrow channel which is the conduit for 17m barrels a day of oil. The US Department of Energy describes the strait as “the world’s most important oil chokepoint”, with an average of 14 supertankers passing through it every day, most of them heading towards Japan, South Korea, India and China.

Analysts believe that Iran would not be able to shut it down completely. But even a brief closure of the strait would have a dramatic impact on oil prices, traders believe, predicting a rise towards $150 a barrel – or beyond, if the disruption is prolonged.

to stop the flow of oil through the Strait of Hormuz if foreign sanctions were imposed on its crude exports over its nuclear ambitions, a move that could trigger military conflict with economies dependent on Gulf oil.

This new threat is just the latest in a series of events that have steadily increased tension between the West and Iran over the past few months. The issue of Iran’s nuclear program was once again brought to the forefront by a November report from the IAEA [PDF], which suggested substantial progress was being made towards the completion of a nuclear weapon. This was compounded by events earlier this month, in which Iranian military forces captured a US drone that was flying in their airspace. The regime shows no signs of kidding around, going so far as to initiate war games, simulating what actions would need to be taken to cut off the Strait of Hormuz.

As a result, oil prices closed just above $101 a barrel today. Further escalation would almost certainly result in drastically higher oil prices.