The straw that breaks foreign oil’s grip on the US?
What will the price of gasoline be in 2012?
By December 2012 the price of gasoline in the US should average about $3.29, with the places like California running about 25 cents higher according to the Department of Energy, although there is reasonable probability that prices could go as high as $4.00 between now and then.
And that should be good news for the likes of GM and the rest of the Big 3 as $3.29 gasoline shouldn’t be enough to deter skyrocketing pickup truck sales and the bread and butter profits of the US auto industry.
But couldn’t the situation in Egypt change that dynamic overnight?
I doubt that when the DOE started compiling this report that Egypt was even a factor; however, I also bet it was something like Egypt that forced the DOE to conclude that even higher gasoline prices were also a probability.
But the uprising in Egypt is beginning to extend far beyond Egypt and is quickly becoming a catalyst for anti-US and Israeli sentiments throughout the entire Middle East, with countries like Iran throwing as much fuel on the fire as possible. A little explosion here and there, maybe an attack on an oil tanker or a Saudi Arabian oil refinery and gas prices quickly blow past $4.00 per gallon.
Perhaps, this would be just another gas spike, just another reminder of the dangers of foreign oil. Perhaps.
Certainly, US automakers are far better prepared for $4.00 or $5.00 gas than they were in 2008, but are they really that prepared? Even worse, is the US consumer prepared? What if $4.00 or $5.00 gas becomes the new norm with spikes going even a few dollars higher?
For instance, what if actual war breaks out? If Israel is attacked an extremely overly-heavy-handed response is almost guaranteed and that could make the region even more unstable, providing ever more fodder for oil speculators to take the price of oil higher. Such a betting game might be the only game in town worth betting if war begins to appear inevitable. Yet, the fundamentals for such speculation might be very real.
Then again, maybe this is just the first step towards peace and Israel’s full acceptance into a new Middle East – yeah, right.
Personally, I think $4.00 gasoline is all but guaranteed for 2011 and even higher prices are possible. However, even if the Egyptian situation is quickly and peacefully resolved, it won’t be long before another Middle East fire starts. How much longer can the US wait before we accept our complicity in this tragedy, and before we accept the fact that change is inevitable – whether we’re prepared or not, or whether we want it or not?