I think people have to remember that Market economics is not proportional - it depends on people and their needs and demands.

There's a gas station, and ten cars that want to fill up. The owner comes out and says "We only have gas to fill nine tanks. Who's out?". Each of the ten drivers says, "I'm not leaving here until my tank is full".

We have 10 units of demand, 9 units of supply. The price goes up by 1/10? Wrong. It depends on how serious the demand is.

The owner says "OK, the gas is now $5/gallon. Who's out?" Nobody makes a sound.

"OK, $6?" Silence. "$8?" They dig in their heels. "$15 dollars a gallon?" They all wince but they're all still in.

The price will rise until one of them decides it's better to take the bus than spend the money. Even if the price goes up to $10,000 per gallon. There is no ceiling on what the price could be - just ten wallets and their finite contents. If they're all filthy rich, and they've all promised their girlfriends a drive to Tahoe this weekend, the sky's the limit.

And that's exactly what's happening in the real world. You will continue to pay higher prices until you decide to mass transit to work, or stop driving to Tahoe every weekend, or adapt the truck to biodiesel, or whatever it takes for you to stop buying the gas.

Stop thinking that it's all the fault of evil capitalists or evil islamo-fascists. The problem is that you don't even know how to transport yourself without your beloved car. And you are going to pay $4.50 or $8 or $15 per gallon because you need that gas and you expect someone else to blink and not buy it, so you can have it.

You must reduce the cost of gas for yourself by reducing your consumption, that's the only option left. Those with deeply entrenched habits to burn gas, or in car-mandatory areas, will get hosed the worst.

Just a quibble, ANWR is a convenient abbreviation for a journalist but it's also a term that right-wing consultant Frank Luntz used with numbing, Goebbels-like repetitiveness in his infamous strategy report for Republicans (the one where he recommended using "death tax" for estate tax and "energy exploration" for oil drilling). He claims (crows) that "an incredible 87% of Americans" don't know what the initials stand for. Whether or not that's true, "drilling for oil in the Arctic National Wildlife Refuge" sounds worse than "drilling for oil in ANWR." Using the full term reminds us of the undespoiled environment that powerful interests want to ruin (oil spills without punishment, anyone?) so that Americans can spend a few more hours in their cars.

(And while I'm not part of Luntz's 87%, I see ANWR so much I had forgotten that the A stood for Arctic and not Alaska.)

If you don't have enough to write about, I'd also like to hear in this sort of article about the impact of conservation.

For example, what is the full breakdown of oil use in the US economy and what realistic areas of conservation are there? I've heard, for example, that government and state operations along with individual conservation could cut oil use by 10 or 20% within a 1-3 year timeframe. Is that really true?

Also, while Europeans and others pay more for gas they tend to get universal health care, spiffy trains, and other benefits of a rational society. I'd be curious to read how much of their gas prices go to pay for such expenses. I'd gladly pay $7k a year in new taxes for health care the Danes get since I already pay $14k a year to get almost nothing. This sort of detail would be good input for debates.

And thanks for writing these articles. What I'd like is more context, that's all.

Mr. Leonard,

I am a regular reader of your column and think your take on oil is spot-on. I have noticed that there are two issues that don't seem to be in the news at all, and was wondering if you might address one or both in a future post.

1. Not too many people actually know what oil is. Of course, many in this country don't believe the world has existed long enough to produce the oil they use, but that's beside the point. It's really no surprise that more people don't see oil as a declining resource because I don't think they know what it takes to come into being. "Fossil Fuel" is just a phrase that many people don't think about. They don't put 2 and 2 together and try to figure it out, and the media isn't filling them in.

2. I have read, maybe even in your blog, that Iraq has the world's second largest oil reserves. I can't imagine those reserves being fully tapped right now. How is this contributing to the "sudden spike" in prices that your other readers are complaining about? Do you think the new agreement to allow American oil companies to start pumping in Iraq will alleviate prices? What do you know about the estimated amount of Iraqi oil compared to what was being pumped at pre-war levels?

A. L:

"Wouldn't that realization, in and of itself, contribute to a dramatic change in market psychology? I submit that a possible explanation for the dramatic events of the past year is that a tipping point has been reached."

No -- the rise in prices has to be caused by supply & demand. Yes, if people expect that prices will rise in the future, they can do things that will cause prices to rise now, but their options are limited: buy lots of the commodity now & store it (which means we'd see lots of people buying lots of oil and pumping it into storage units), or (if you're a producer) stop pumping. But we don't see producers taking their oil pumps offline, and we don't see people buying oil for storage. If neither of these is happening, then psychology won't much enter into it.

Buyers seek the lowest price, regardless of their psychology. And the only way they'll pay more is if that's what's required to edge out all of the other buyers: they've essentially got a choice between no product at all, and paying a lot.

So no, I don't see a psychological shift in expected future oil prices to change today's oil prices -- unless, of course, people either stop selling oil today, or start buying & storing oil today.

-Wil