Formersandiegan, most of the cost of higher gas prices in Europe and elsewhere are attributable to higher taxes. Everyone pays more or less the same for gas. Higher gas prices are probably here to stay, at least that the is consensus in the media. Although no one wants to say exactly why prices have shot up recently, speculation and good old supply and demand seem to be high on the shopping list. Theories also abound over ‘peak oil’, and the shifting alliances in a grab for oil.
Many of the major oil producing countries are considered politically risky areas, such as Nigeria, Venezuela, Iraq, Iran, and are not all friendly to the US. China’s growing demand for oil is taking strategic advantage of some of these shifts in alliances, and tensions are building. This is not new. Britain tried to dominate the middle east to feed it’s own oil ambition in WWI, but was largely beat to it by US wealth.
One theory suggests, that when US oil peaked, it struck a deal with OPEC that all oil would be purchased in dollars, which were then used to invest in US securities. The dollar then became tied to oil, a little like currencies used to be tied to gold. Hence the term ‘Petrodollars’ and the ‘oil standard’. So it would seem that oil and the dollar now have a negative impact on each other. The dollar declines and oil becomes more expensive. Oil goes up and the dollar declines.
I am not an economist so don’t know how true this is but is seems fairly plausible. That oil will eventually run out is not in dispute, and that prices will rise as a result is also a given. How much it will adversely effect the average American it’s just a case of whether they are prepared to tolerate higher prices, as many other countries have for a long time, or whether they compromise on use, and scale down vehicle size and use other means of transportation. Of course transport is not the only use for oil. It is very widely used in the manufacturing of many goods.
