Yes, $4 a gallon seems steep, but the worst is surely yet to come, Robert J. Samuelson writes in the Washington Post. Gas is on pace to rise to $7 a gallon by 2012, with oil rising to $225 a barrel, according to one economist. Oil-rich nations are acting as though we’ve already hit “peak oil,” and fast-growing nations in Asia and elsewhere are keeping demand steady.
The fallout will be widespread. Manufacturers will move closer to home as transportation costs soar, inflation will worsen, and the auto and home industries will be further hit. Meanwhile, Samuelson says, we should begin drilling more domestically, and working on cheaper biofuels. Finally, he notes, we should set a floor price on oil, protecting those new fuels, and preventing America from getting delusional again.