Poor, poor Oil Companies.

Oil is bought at the same price the world over. It is a world market. As you alluded to, the difference in price between gasoline in the US and "petrol" in the UK is the amount of taxes the people allow on their fuel. There is very little difference in the cost of the refined product itself.

Higher prices will discourage consumption, but the "addiction" at the other end of the well is just as high (or higher!) than our addiction to the contents of the well. The oil producing economies will drop the price lower and lower as consumption declines. But I think this traditional view is moderated by the fact that a reduction in our consumption may not have as much effect as it once would have.

China and India are quickly growing their industrial infrastructure, and they will drive the demand up. If we develop alternatives at the $3.50 a gallon mark, and oil stabilizes there, China and India could grow for quite a while without consuming all the oil. It could work out nicely (except for the whole emissions / possible global warming thing!)

 

Well stated. And I got rid of my 17 mpg SUV as well. Happy w/ the Prius so far in nearly every way - and at triple the SUV's mileage.