Freedom fever in the Middle East has roiled the oil market with uncertainty and created a guessing game of sorts: Just how high might gas prices go?

The painful $4-per-gallon peak of 2008 is a possibility as petroleum-rich Libya teeters in chaos, some gasoline industry watchers say. And while $5-per-gallon gasoline seems highly unlikely if the crisis is contained to Libya, it's a much different story if there's a crimp in Saudi Arabia's oil pipeline.

"If we wake up ... and there's violence in the streets of Riyadh [the Saudi capital], every number gets thrown out the window and we are basically looking at uncharted territory," said Tom Kloza, chief oil analyst at Oil Price Information Service. "It completely alters price forecasts."

Daniel O'Connell, energy vice president at futures traders MF Global, agreed. "The bottom line is that there is a huge wild card out there." And with the U.S. economy still weak, cash-strapped consumers are much less prepared to handle 2008-like gas price spikes. "It's a whole different story now," O'Connell said.

Even before revolution spread across the Mideast, consumers had reasons to be cranky about gas prices. A gallon of gas in the Twin Cities cost $3.37 on average Thursday, up 8 cents from Wednesday, 20 cents from a week ago and 63 cents from a year ago, according to The average U.S. gas price Thursday was a dime per gallon less than in the Twin Cities, the website said.

Gas prices have been climbing in recent months as crude oil prices rose, the product of an improving world economy coupled with cold, oil-draining winters in parts of the United States and Europe.

But nowadays, a Mideast-turmoil risk premium is built into the market -- even if Saudi Arabia itself remains stable, said Patrick DeHaan, senior petroleum analyst for, which oversees more than 250 websites that track gas prices nationwide.

"It's like auto insurance," DeHaan said. "You have a couple accidents, and insurance companies consider you a greater risk and you wind up paying more for your policy." DeHaan believes that concern over events in the Middle East will combine with factors that already were pushing up prices and that by summer, U.S. consumers could see $4-a-gallon gas.

Another take on gas prices comes from Tancred Lidderdale, a senior economist at the U.S. Energy Information Administration. He noted that the price of the July unleaded gasoline futures contract hit $2.85 a gallon Thursday, up from $2.66 a gallon on Feb. 1.

He said the general rule to determine the retail price is to add 70 cents to the futures price. That would put the average retail price of gas this summer at about $3.55 a gallon.

Andrew Lipow of Lipow Oil Associates said that if Libyan oil production alone is totally shut down, consumers could see price hikes of 20 cents to 50 cents a gallon in the next few weeks. Lipow estimated that about one-third of Libya's production was off line, while four major European oil companies have announced cutbacks.

Libya supplies Europe

Libya is the world's 18th-largest oil producer and accounts for about 2 percent of world petroleum production. It's an insignificant supplier to the United States, which counts Canada, Saudi Arabia and Mexico as its top sources of imported oil.

But Libya is a big crude oil supplier to Europe. And any cutback in Libyan oil will force Europeans to go out in the open market for petroleum, competing for some of the same supply drawn upon by the United States, said John Kilduff, an oil analyst at Again Capital.

Oil futures on the New York Mercantile Exchange this week have reacted to the Libyan violence -- and fear of its spread -- by crossing the $100 a barrel mark for the first time since 2008. However, after breaching the $100 mark on Thursday, the April futures contract fell back and closed at $97.28 per barrel.

Crude futures dropped after the United States, Saudi Arabia and the International Energy Agency made assurances that they could compensate for Libyan supply disruptions. The Paris-based International Energy Agency advises 28 nations and has its own oil stockpiles.

Still, oil markets are rife with fear of contagion, that protests and ultimately oil production disruptions could spread to Algeria, Iran and Saudi Arabia. "It's a row of dominoes," Kilduff said.

All eyes on Saudi Arabia

Saudi Arabia is the world's largest oil exporter and a country with excess production capacity, a safety valve for global oil markets during times of tightening supply. But Saudi Arabia has its own potential for social unrest.

Social media sites there have been urging reforms and have called for a day of protest on March 11. And Saudi Arabia is like Bahrain in that it's ruled by Sunni Muslims but also has a large population of Shiite Muslims. Tensions between Sunnis and Shiites played a role in giant demonstrations in Bahrain in recent weeks.

"If the premise is that we will have a supply disruption in Saudi Arabia," Lipow said, "then it's likely we'll have $5 a gallon gas."

Bloomberg News contributed to this report. Mike Hughlett • 612-673-7003