Much of what I'm about to say, I've said before, is basic environmental econ 101 and isn't very profound, but I think it's worth repeating. Higher gas prices are a good thing. From The Telegraph:
The International Energy Agency has predicted a supply crunch in the world's oil markets that could send prices soaring and place a severe dent in global growth.
[...]
"Oil and gas price pressures look set to remain in the coming years," the report said. "Slower-than-expected GDP growth may provide a breathing space, but it is abundantly clear that if the path of demand does not change on its own, it may well be driven to change by higher prices."
I know high gas prices are uncomfortable and inconvenient, but they are better than the alternative. To see why, let's look at a counter example...suppose gas prices don't rise over time.
What does it mean if gas prices stay at say $2.75 a gallon? It could mean one of two things: 1) Oil/Gas is infinitely abundant and we are only paying the cost of extracting and refining each barrel/gallon. In this case, there will be mild day-to-day fluctuations in gas prices, but no discernible long term trend. The price is working properly in signalling no lack of scarcity. Or 2) Oil/Gas is not infinitely abundant and the price is kept artificially low by some other (nonmarket?) force. In this case, the price is sending the wrong signal about scarcity and there is no built in incentive for consumers to adjust their behavior or producers to adjust theirs. In this case, the price is sending the wrong signal and at some point catastrophe looms.
So which is it? Obviously case 1 is not true. Oil/gas is not infinitely abundant. At some point oil will become scarce(r) and we will be forced to adjust/adapt. When that will happen? Well only GOD and the PeakOilers have an opinion on that, and only one of them is omniscient. Fortunately the non-omnipresent among us have prices to help us decide what to do.
That brings us to case 2. If oil prices don't adjust in response to scarcity, then to put it bluntly, we're screwed. It is the scarcity adjustment of prices that will drive any change to better fuel economy technologies, alternative fuels and reduced consumption. If gas prices don't rise in response to long-term scarcity, then there is no incentive to change how we find, make or use energy.
I'm an optimist. I think prices are working. It might take time, but higher gas prices will change behavior. These changes might not be fast enough for our immediate result oriented political system where politicians do everything to look like they're doing something, but higher gas prices will force changes. What will those changes be? I don't know. You'll have to ask GOD...or the PeakOilers.
