Gasoline prices have done what almost no one expected. They stayed almost the same for more than two years. Now they will be going up. Up 10 percent already, they are likely to go up further as a result of a rise in world oil prices, as speculators foresee the decline of the U.S. dollar from the Fed’s latest monetary easing tricks.
But seeing gasoline prices over $3.00 a gallon is no longer shocking. What is shocking is what will happen to gasoline prices if the U.S. labor market improves in a big way and 20 million more workers are driving to work in gasoline-burning cars. That would create enough of a global oil shortage to drive gasoline prices up near $6.00 a gallon. Of course, that, in turn, would create another recession. But world oil prices will go up eventually regardless of what happens to the U.S. economy. We should enjoy the low fuel prices while they last.