This CNNMoney/Fortune article gets it exactly right:
"Arguments that $4-a-gallon gas (or even higher) is here to stay are dead wrong. Housing's boom-and-bust cycle tells you why.
NEW YORK (Fortune) -- High-flying tech stocks crashed. The roaring housing market crumbled. And oil, rest assured, will follow the same path down.
Not everyone agrees. In an echo of our most recent market frenzies, some experts pronounce that the "world has changed," and that the demand spikes, supply disruptions, and government bungling we face now will saddle us with a future of $4, $5 or even $10 a gallon gasoline.
But if you stick to basic economics, it's clear that the only question is when - not if - prices will succumb."
Not everyone agrees. In an echo of our most recent market frenzies, some experts pronounce that the "world has changed," and that the demand spikes, supply disruptions, and government bungling we face now will saddle us with a future of $4, $5 or even $10 a gallon gasoline.
But if you stick to basic economics, it's clear that the only question is when - not if - prices will succumb."
Read the whole thing and find out why $4 a gallon is unsustainable.
Malaysians are rioting over 84 cent a gallon gasoline, up from 50 cents because their government can't afford to keep paying the $2-3 a gallon subsidy they've been providing to their citizens. Something will have to give; either the Malaysian treasury, Malaysian ability to pay, or demand. Similar situations are playing out in India, China, Iran, and many other nations that subsidize gasoline sales.
X will explain in a future post why now is the time to increase gas taxes in the U.S. and it's got nothing to do with Global Warming.
2 comments:
God, I hope you are right, X.
turns out I was.
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