Paying More at the Pump - Get Used To It

The Bush Administration joins petroleum industry observers in predicting high gas prices through 2006.

The L.A. Times reports that there is no relief in sight from record-high pump prices which, in some California markets, are at $2.55 per gallon.

The gasoline price increases are driven by oil, which accounts for about half the cost of each gallon of gasoline. The U.S. forecast figures oil prices will remain above $50 a barrel for the rest of this year and 2006; a year ago today, oil was selling for $36.15.

Also, the International Monetary Fund said Thursday that high worldwide demand would keep oil supplies tight and could cause spikes as high as $100 a barrel, echoing a report last week by a Goldman Sachs analyst who predicted an oil price "super spike" as high as $105 a barrel.

Despite the surging pump prices, the government analysts predicted no retrenchment in gasoline consumption. Rather, they said, motorists will slurp up 9.3 million barrels a day this summer, a 1.8% increase from last year.

Reasons include a growing number of drivers, the proliferation of sport utility and other vehicles that guzzle gasoline and the assumption that many motorists will take lengthy road trips, Caruso said.

"Highway travel continues to steadily rise," Caruso said. "It's rising nearly every year."

We can only hope that this 18-month forecast is an extreme worst-case scenario that will go the way of most other long-term economic predictions.

At what point, however, will the United States begin to accept the hard truth that we have to commit ourselves to developing alternatives to petroleum? We will not drill our way out of this problem. The fact is that oil is a finite resource. Do we intend to wait until we actually run out of the stuff before we start developing new methods?