OK, this is an interesting thread. Maybe I'll throw my cynical 2 cents (european cents, mind you, that's more than 3 US cents with the current exchange rate).
Resident_Hazard looks at the problem from the perspective of Joe Sixpack, and I completely understand his anxiety in the matter. I spend more than 200 euros a month on gas, and I know for a fact that no matter what, the price will not ever come down on a permanent basis. Sure, there may be some temporary fluctuations in the prices, but whenever such a phenomenon occurs, keep in mind that it's only temporary.
I pay roughly 1,5 €/liter for gas. That's about 6,7 €/gallon, which is almost 11 US$/gallon. I'd say life with higher fuel prices is completely possible, and 8 $/gallon is not really that much.
Looking at the situation in the USA is an interesting study. You see, I think several mistakes have been made in the relatively recent past, and the price will be high in the relatively near future. The mistakes have a lot to do with tradition (i.e. the kind of automobiles in use, the heavily mechanized agriculture etc.) combined with the two boogeymen called housing bubble and peak oil. Let me explain.
Just as R_H mentioned, it seems that the infrastructure in the USA has been built in a way that does not support using public transportation or bicycles at all; everything, including commuting to work, getting the groceries, etc. has been designed so that the only way to do it is to use a car. That means that being hit by peak oil will definitely force a lot of unpleasant changes upon the people there. The suburbs will become expensive to live in, because there is really no other options for most people other than continue using their cars. The whole concept of a distant mall will become outdated, and jobs centered in distant parts of cities will be less tempting. Unfortunately, if I'm not completely mistaken, the very structure of the post-60s urban areas there cannot support such a transition.
Add the so-called housing bubble into the equation, and you have an interesting situation in your hands. A lot of the bubble has been caused by recent developments that have been built using the same doomed concept of detached sprawl, based on cheap driving and medium-distance commuting. The houses already have over-inflated price tags, and the unavoidable fact of rising oil prices means that in addition to costing massively more than they are worth, living in such houses will get more expensive in the long run. The extensive new developments do not support any form of public transportation, and I'd say buying a house in such a place at this time would be insanity.
Now, the peak oil will cause a massive inflation in prices (massive being a subjective term, of course), because oil is being used in every phase of the life of virtually every product. I once read that a leaf of lettuce produced in the USA will contain, on the average, 78 energy units of fossil fuels for every unit of actual nutritional energy it provides to the person eating it. That's due to farm machinery, fertilizers, transportation, heating greenhouses, cooling the stores and so forth. The ratio is better in more concentrated items on the menu, of course, lettuce is a bad example, but you get the idea: hauling stuff around and using machinery and fossil fuels for the chain of production is not a viable solution in the long run, if the price of the fuel skyrockets; and still, people will need to eat. The oil shortage will simply hurt every part of the equation.
If the housing bubble will cause banks to go bankrupt and lead to millions of foreclosures and personal bankrupties, the additional effect of soaring prices due to oil prices will have a scary cumulative effect on things. The economy is going to be rougher than you'd think. The structure of things in several parts of the USA is not built for the necessary changes in lifestyle, but the changes are most likely inevitable.
The reasons behind the rising fuel prices are simple: there is more demand than there is supply. There may be some foul play in OPEC and Big Oil, but the fact remains that the years of cheap oil are gone. The demand keeps rising, and the oil production in many places, including the North Sea, the whole USA, possibly Russia and Kuwait, and perhaps even Saudi Arabia has peaked, and there is no going back. All the time, the Chinese are building cars faster and faster, and India is becoming motorized. If the supply is diminishing and the demand is growing at an enormous rate, the laws of supply and demand dictate that the price will go up. It really is that simple, and unless you implement a new communistic world order, that's the way it will go. And even that new world order will not be able to provide new oil at the old prices. That fact cannot be fought, it's a part of the physical reality we live in, the oil that is easy and cheap to pump is getting scarce.
Now, I've written that that's the situation in the USA. What about Europe and other places? Will we have it easier? Well, it depends.
First of all, the towns and cities in Europe have a little bit different structures than the recently built suburbs in the USA. The older, in some cases centuries older, cities have a more centralized shape, and the shops, markets, jobs and housing are often much more intermingled, scattered in a uniform mess. That also serves the purposes of public transportation and moving around with muscle power much better. It's completely possible and even rather easy to live without a car in Helsinki, for example, and Helsinki isn't an old town on the european scale. We've also avoided a housing bubble, even if the prices are ridiculously high at the moment, depending on the location.
The already high gasoline prices are also a blessing in disguise, I believe. It is said that 75% of the local fuel prices here are different taxes. That means, of course, that while the fuel in the USA doubles from 4$/gallon to 8$/gallon, it is basically possible to lower the taxes and buffer the impact. It also means that the rising price of crude has a lesser effect on my wallet when I'm by the pump. If 75% of the price is taxes that are not dependent on the price of crude, then doubling of the price on crude will only add 25% to my fuel bill. That's not exactly how it goes in reality, of course, but you get the idea. On the other hand, in the USA fuel has been cheap due to very low taxation on gas, and that means that any price increases on crude have a more direct effect on the actual gas prices.
What's more, having had high prices on fuel for decades already (compared to the USA) means that people and the economy have been adjusted to the environment, so to speak; our cars are more fuel efficient, and I have less than merry memories of the moments when I fueled my two Chevy Astro vans back in the day. Never again, fuel cost almost 50% less back then. Also, the companies that work here have their core businesses built so that the high prices are included in the calculations. Maybe it's easier to weather the coming storm this way, we'll see.
Personally I've already taken some steps to avoid problems myself, the biggest one being the removal of the oil heating system from my house and adding an electric and wood-burning central heating system. The future of oil was an equally important issue with my environmental concerns. I want to avoid fossil fuels because of my beliefs in global climate problems, and I want to avoid being caught with my pants down when a barrel of crude costs 300 $. The kind of central heating I installed allows me to switch the source of heat more easily, and even add new components such as heat pumps (ground or air), solar cells (either electric or more crude ones with simple liquid circulation) or a friggin' windmill if I feel like it. It's not a bad idea to be prepared, people, especially since with the prices soaring in all kinds of energy, any free energy is always a good thing for your own wallet, too, not just for the environment.
But there's worse to come for the USA, I'm afraid. So far, the US dollar has been an important currency, because it's been the only currency in the international oil trade. Well, once that comes to an end, the dollar will plummet. If Iran, for example, succeeds in opening a real oil exchange that runs on the euro or yen, the dollar will no longer enjoy the privilege of the main oil currency, and it will lose more of its value. That means that a lot of money in the vaults of different countries' central banks will need to be dumped, and the value of the dollar will spiral down. The main reason for hoarding the dollar has been the connection to oil trade. I think the Chinese are trying to get rid of something like a trillion dollars as we speak, and the Saudis, always informed on things, have used a lot of their dollars buying real estate around the world. It's sensible to invest the money in something tangible rather than hold onto money that's probably going to lose a good portion of its value. It also means that in the future, getting foreign loaned money might be more expensive for the USA, and paying back the loans already there (more than 79 000 dollars for each US tax payer, BWT) will turn even closer to impossible than it already is.
A lot of people believe, not without merit I believe, that one of the real reasons behind the Iraq invasion was that Saddam and Iraq intended to open an oil exchange open for other currencies. That is the most logical reason for the war I've heard so far, and it actually has some devious credibility.
But back to the main subject: whatever the politicians do and whatever laws they pass, the price of fuel will not come down any more for any longer periods of time. Never. It may cause a lot of people a lot of grief, but in the final analysis, even the US government can do very, very little about it. 8$/gallon is still cheap, and I'm willing to bet a bottle of Scotch single malt once again that we'll see much higher fuel prices than 8$ a gallon in the USA before 2020, adjusted for inflation. People must get used to it, because that's the real world. There's nothing the Congress and the White House can do about it, the only way is to adjust and to lower the consumption until it's low enough to be sustainable.
Please note that I do not rant about climate change here. That thing is going to add its own flavour into the stew, too. Big things are in the air, people.
_________________ Chest wounds suck (when properly inflicted).
-Butch-
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