Business

Get ready for $5 a gallon for gas this summer

Wall Street’s newest doomsday prediction: $5-a-gallon of gas this summer.

The civil war in Iraq could severely threaten oil production in the Middle East this summer, making summer road trips or jaunts to the beach a lot more expensive.

The Islamic State in Iraq and Syria, or ISIS, the radical Sunni Muslim insurgents, could drive up the cost of a barrel of oil another 40 percent, to about $160, if they take control of Baghdad and continue to conquer the oil-producing areas in the south of Iraq, according to Francisco Blanch, head of commodities research at Bank of America.

That translates into more than $5 dollars a gallon for New York drivers, said Sam Margolin, an energy analyst at Cowen and Co. in New York.

“That’s a very dangerous level, in our view, for the global economy,” Blanch said Wednesday. “We think that that level could create a recessionary scenario.”

With gas prices now around $3.93 in New York, according to the AAA, a spike to $5 would take a 27 percent bigger bite out of motorists’ wallets.

A barrel of Brent crude oil, which is what Iraq produces, closed Thursday at $113.10 — up about 8 percent since early April.

Iraq is the world’s second-largest producer of oil, Blanch said, so the insurgency there will have huge ramifications for drivers around the world.

The good news, Margolin said, is that the pain at the pump probably wouldn’t get much worse from there.

“If we’re out of oil, at what price would demand start to fall? It’s probably at that $5-a-gallon level,” he said.

Wall Street traders are already bracing for an impact by speculating on the commodity.

“The bet is that oil is going to rise,” Margolin said. “The data that’s publicly available shows that people have been adding to speculative oil positions.”