The Gulf and gas prices

But there's one issue that hasn't been discussed too much — the price of gas. At first, prices at the pump spiked, a typical reflexive action, but not necessary given that most of the crude in today's stations was bought weeks, even months, ago at pre-spill prices. But what happens next? If you've filled your tank lately, you've noticed that prices are actually on the DECLINE — down nearly 3-4 cents per gallon in the past 10 days, and expected to fall another 3-4 cents either this week or next.

Is that tube BP recently installed having its intended effect? Are we saving millions of gallons and hence, stations have excess supply? Not hardly. Economists chalk these latest price drops to a sharp rise in the dollar when compared to European currencies. If there's one sliver of benefit from the fiscal calamity facing Greece and her sister nations, it's that the U.S. dollar has backed its way into a position of prominence once again. I could spend two full columns arguing how that situation spells peril for us in the long term, but I won't go there.

Even then, this indirect benefit at the pump will be short-lived. Economists are already running forecasting models determining the long-term impact not of the loss of a major well in the Gulf presently, but of losses of potential new rigs many were relying on to meet the insatiable demand for crude domestically. Current rigs are already running at or beyond capacity. They can do no more. Further, if current moves by the Congress are any indication, you can bet regulators will be watching those existing wells like vultures.

The bottom line? Economists expect prices to rise significantly in about five years. Yes, folks, $5 per gallon of regular is not farfetched. So it appears the environmentalists will seal another win for their agenda — the goal of pricing fossil fuel at such a high rate that demand is stifled and America's addiction begins to wane. I wonder if BP will take responsibility for that? I don't think so ...


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