The worst oil shock since the 1970s has put a permanent mark on the American way of life that even a drop in oil's price below $100 a barrel won't erase. Although oil prices dipped beneath the $100 mark Friday for the first time in five months, it still isn't cheap and Americans have long memories. They are saddled with debt, high food costs and home prices worth far less than two years ago.
At $100 a barrel, that's about $2.50 a gallon for unrefined product. Add another 50 cents a gallon for refining, transportation, local, state, and federal taxes, for about $3.00 a gallon. That's still not cheap as far as I'm concerned. Not even affordable for the long term. I believe LNG prices out around $2 a gallon equivalent -- but that's before it's subject to widespread demand as an auto fuel. And the Dems will want to add more taxes on it, natch, to "encourage conservation."
Experts say some relief at the pump is probably coming within weeks after light, sweet crude fell to $99.99 before closing later at $101.18, up 31 cents. But the era of "staycations," four-day work weeks, airline fuel surcharges and costly commutes could be here to stay.
A sustained period of $100 oil should eventually lower pump prices from the current national average of about $3.65 a gallon to within a range of $3 to $3.25--around a buck lower than the all-time record average of $4.114 a gallon set July 17 when crude prices peaked above $145 a barrel.