The days of cheap gas prices are gone forever.
That doesn't mean oil companies aren't getting rich off the trend of ever-increasing wholesale prices for oil in the past two years. They are. Exxon-Mobil posted record profits in the last quarter, and other big oil companies have followed suit. And at the pump, the wild fluctuations in prices follow neither rhyme nor reason. In May, prices in the Midwest were 50 cents a gallon cheaper than on the West Coast; now, they've caught up. Prices on the south side of Seattle can be up to 20 cents a gallon cheaper than on the north side.
Diesel, which used to cost less than regular gas, now consistently costs more—because the truckers and delivery drivers that rely on it cannot cut back their consumption no matter how pricey it gets.
Blame George W. Bush, but even more than Bush, blame China. India and China, the world's two most populous countries, are poised to surpass the United States in terms of total oil consumption, with few environmental controls or global warming limits. When increased demand meets fixed or declining supply, prices rise. China has the world's most vibrant and successful economy, and a rapidly expanding middle class that wants to enjoy all the perks that the wealthy West has enjoyed for years.
At the same time, Bush's disastrous invasion of Iraq has taken production of the country's massive oil reserves off the world market much of the time, as sabotage from the insurgency has effectively crippled Iraq's oil exports.
Globally, oil reserves are declining, with some experts claiming that the world's capacity to produce oil has already peaked. The easiest to reach oil has already been extracted; what's left is in places like the Arctic or the landlocked Caspian Sea region. In the 21st century, oil will only get scarcer. In such a scenario, something's got to give, and the first thing has been the cost of oil—only recently breaking $50 a barrel, now approaching $70.
At the pump, the ever-increasing cost of gas has had a ripple effect on America's economy. If ever there were a time to declare war on America's dependence on oil, now would be it. But the Bush/Cheney energy bill, just passed by the Republican Congress, resolutely ignored all this in favor of an exhaustive supply of price supports and perks for the oil and gas industries.
While the rest of the developed world has been moving ahead with the development of new technologies for renewable energy, the United States' official policy is, basically, to enrich Bush's oil-patch friends, with predictable consequences for the environment, the economy, and the price at the pump.
More ominously, the increasing consumption of oil and gas by China, India, and other emerging economies simply isn't sustainable. The damage to the environment, including contributions to global warming, is tremendous; beyond that, the supply simply isn't available. What is available is often in the hands of governments that are or can easily become at odds with Washington: the Islamic world, the former Soviet republics, or Pat Robertson's bête noire, Hugo Chavez's Venezuela. All these countries have been busy cutting deals with Japan, China, Europe, and other consumers for long-term access to oil. United States foreign policy is essentially being held hostage to this sweepstakes. It's why, for example, Saudi Arabia can spawn bin Laden and most of the 9/11 hijackers, and Washington looks the other way.
In the short term, it's hard to imagine that any other president would have fared much better than Bush—save his fiasco in Iraq—in forestalling the steadily increasing cost of oil. But it is in the long term that eight years of negligence by the Bush administration will prove to be terribly costly. The lack of action on climate change alone is simply criminal, but in general, America needs to reduce its economic dependence on oil—period. Bush has moved in exactly the opposite direction, leaving oil companies with a free hand to rack up record profits. Unless consumers can somehow reduce or give up driving and participation in an oil-based industrial economy, they are pretty much powerless to do anything about prices at the gas station.