Everybody just assumes that gasoline will continue to go up in price, driven by world demand. They assume that the economy will continue to roar ahead and that both China and India's citizens will put more cars on the road and burn more oil in their factories.

A Big Assumption

Yet, that's a big assumption. There is no guarantee that fuel prices will go up or that China and India will demand more. Already, the high price of oil is pushing more factories and electric plants to coal and other fuels. Automotive standards world-wide have increased fuel economy requirements, leading to lower consumption as new cars are purchased.

People will not be able to afford to drive as much. Economies that are just breaking out and modernizing may be stagnated by the high cost of oil, and consume less. Cars might not be as popular as predicted in China and India, when people realize the costs. There may restrictions on roads constructed, or even driving due concerns over pollution. Global warming concerns might reduce energy consumption.

More likely though, they might just discover new sources of oil. Higher prices force more exploration and investments in oil, and will encourage more production. That production in a few years could flood the market and cause prices to drop down from their sky high rates to something more affordable. This is not unlike the price drop we saw in the 1980s and 1990s.

The Result

If prices go down, there will be a big disincentive to conserve. Even if prices only go down a fraction what they have currently risen, the higher costs have been accepted as the norm and there is little acceptance to change our policies towards consuming fossil fuels.

If we don't choose to conserve, that will reduce our ability to reduce carbon dioxide emissions. It also will mean more pollution, and less of demand for people to return back to communities where people are together, rather then stuck in isolated suburbs, living in fear of the violence in our cities.