So is there any good news to be had? The answer is, yes...though some of it you may have to make for yourself.

Good news: the commuter culture is coming to a close. Finally, the utter insanity of spending the equivalent of an entire waking day in an automobile each week going to and from work so you can (among other things) pay for the gas to make the trip is being exposed for all to see. Fathers might actually start arriving home in time to do something other than nuke a microwaveable dinner and tuck their kids in. We might actually (gasp!) get home from a day's work while there's still daylight, at least March through October or so. Families might actually start spending time together again. Family dinners, anyone?

Good news: energy conservation and alternative energy are finally being taken seriously. Even when gas was $1.78 a gallon, deep down inside we all knew it couldn't last. Someday we knew the cheap ride was coming to an end. Yet it was all too expedient for politicians to punt the ball and leave solving the problem to future generations. Now the ball has come to rest. Sure it's painful, but finally the foundation is being laid for America to have an energy source that doesn't enrich people who hate us, doesn't pollute, and that will last forever. That source is likely to be thermonuclear fusion (unless there's a real technological breakthrough and we come up with cold fusion, zero-point energy, or total mass conversion). The technical hurdles to harnessing any of the these energy sources are formidable, but even a journey of a thousand miles begins with a single step. Despite the malingering of two generations of politicians, that step is now being taken.

Good news: our cities and towns are going to be reinvigorated. As life becomes more local, people will be looking more and more to the communities they live in for entertainment, recreation and economic sustenance. Look for fewer anonymous, cookie-cutter suburbs, and more vibrant city plans that mix residential and commercial development. After virtual extinction during the automobile-driven mid-to-late 20th century, the concept of civic space is experiencing a renaissance. Local forms and venues of entertainment--harvest festivals, farmer's markets, county fairs, carnivals, Christmas festivals, small dance halls, bowling alleys, movie theaters, local attractions, even libraries--the localization of our lives in the next decades will breathe new life into these venerable American traditions. One man who has minced no words about these trends is James Howard Kunstler.

Good news: our food is going to become more nutritious. Why? We'll be growing more of it ourselves and relying less on mass-produced, processed mega-foods. Prices may be zooming at the grocery store, but raising your own fruits and veggies isn't much more expensive than it was ten years ago. Even an apartment balcony can grow a surprising amount of food. Enterprising locals are making money selling tomatoes to local restaurants since salmonella fears have severed conventional supply lines for this ubiquitous food.

If you have a yard, even a small one, growing a garden opens up all kinds of possibilities for not only your own sustenance, but bartering with neighbors for their produce or even other goods and services. Now would also be a good time to plant fruit trees, especially citrus and other tropical fruits, as these take several years to become productive. Even if they have to be grown indoors in pots because you live in a cold climate, they can be nurtured with highly efficient shop lights, and moved outside when danger of frost is past.

Good news: more and more of us will be going to four-day workweeks and telecommuting. With gas costs soaring, the idea of working from home and working a four-day week is gaining increasing acceptance. While some people may chafe at more regulations, as gas goes past $5 a gallon and the need to conserve fossil fuels becomes a matter of national security, we may well see government applying pressure to business to reduce the workweek and shift workers who could work remotely back home, at least one day a week.

The math makes compelling sense: say a city has 100,000 commuters. 50,000 of these could be shifted to a four-day week. 25,000 could also telecommute one day a week. So that's 150,000 commutes a week that don't need to happen (counting to and from work). Figuring from a base of one million commutes a week, that's a 15% reduction in commuter traffic. If each commute burns a gallon of gas, that's 150,000 gallons a week, which translates into a savings of $750,000 a week, or $39 million a year those commuters could save or drop into other parts of the local economy. Those numbers were easy to blow off during prosperous times when gas was cheap, but will become increasingly difficult for policymakers to ignore as gas prices climb.

Good news: our air is going to be getting a little cleaner. As gas prices rise and people drive less and shop less, that translates into fewer car trips, shorter car trips, and fewer truck-miles. People will also have a stronger incentive to retire old, gas-guzzling, high-emission vehicles and replace them with newer, low-emission vehicles. That in turn means less air pollution.

Good news: we're going to be getting into better shape. The bicycle, often arrogantly dismissed outside of college campuses as the means of transport of paupers over the past couple decades, is coming back into style. Look for more bicycles to be made, and for cities and towns to increasingly take bicycle and pedestrian traffic into account when planning cities and making changes to existing plans. Once the public feels the numerous benefits of physical exercise, look for bicycling to nearby attractions to become an outing and leisure activity in its own right.

Good news: home improvement, home decorating and home design will be growth industries. We're going to be spending less time getting away from home, and more time enjoying our homes. Thus, home will once again be the hearth, the focus of familial activities. The drive to make the home a place to live rather than spend the year commuting away from it and the summer vacationing away from it will strengthen over the next decade. Saturday afternoon barbecues and Christmas dinners will return. Everything from exotic plants to softer furniture to PlayStation 3s will be in demand as more nights and weekends are spent "in."

Good news: normal people will be able to own homes again. After two decades of housing prices absurdly inflated by cheap commutes and easy credit, pricing is on its way back down to Earth. The housing bubble still has quite a ways--at least another year or so--to deflate, with rising gas prices, layoffs and more foreclosures on the way. Even renters will see some relief, as homeowners "on the margins" of foreclosure rent out rooms and their second homes that they can't unload at anything close to the rate they paid for them, thereby increasing the supply of rentals and decreasing the price.

Good news: political reform will come sooner rather than later. I think we'll see changes across the board, but the area I'm thinking of is how we treat the poor. America has become polarized into two camps. The first camp, often referred to as "conservatives," believes the poor are poor because they want to be, and that sharing resources is bad because that will just encourage poor people to be lazy. The fact that many of these poor are in fact working seems to matter little to people on this side of the issue. The second camp, often referred to as "liberals," believes that is we take money from somewhere, create a bureaucracy, and hand out money from on high, the poor's predicament will be resolved. The dismal record of inefficiency most social welfare programs have doesn't factor in to these folks' calculations.

The 20th century showed us neither scorning nor subsidizing the poor seemed to work too well. The coming decline will force us to look beyond these ossified notions, because there are going to be too many poor people to just ignore, and the government, already hip-deep in debt, isn't going to be in a position to offer much more aid than it already does. I don't claim to know exactly what solution will be arrived at. Given that the political Establishment seems to be without a clue as to the kind of world we're headed for, my educated guess is that this new approach will be communal, bottom-up, grass-roots driven, and do an end run around conservative and liberal politicians alike. By 2012, I predict the American two-party duopoly is going to come under unprecedented pressure to do something it's quite unaccustomed to: stop posturing and start delivering results.

Good news: we're going to be slowing down. Cheap oil and easy credit energized our lives and helped us move faster, but somehow we just never got ahead. We couldn't ever get where we were going quite fast enough. If we moved a little quicker, the clock just seemed to speed up a bit, and we ended up just as far behind. But if we have fewer places to go and less ability to get there, it stands to reason we'll be racing the clock less, and stopping to enjoy life a little more.

The unchallenged control the clock holds over us Americans is actually a fairly recent invention. For 99% of the human race's history, the time of day was "sunrise," "morning," "noon," "afternoon," and "gonna be dark soon." I'm not seeing us return to that level, but I do believe the pace of life is going to shift to a lower gear as we focus less on where we "have to" be, and more on where we are.

Good news: the concept of community is going to undergo a revival. As our lives become more local, and we focus on where we are, we're going to begin to notice (as our elders did a couple generations ago) the people we share that locality with: also known as neighbors. The block party is going to come back into vogue, as is the park where kids used to play kick-the-can, trick-or-treating on Halloween, and so forth. This represents another downshift in political culture, as the nation and state, strapped for resources, recede into the background and the community and town become more important...as they once were.

Good news: spirituality is going to experience a revival as well. It's a truism noted throughout human history: during prosperous times, people turn from the spiritual to the physical, and when times get hard, people look for spiritual answers to the questions of life. (In the interest of being nonpartisan and unbiased, I'm not going to speculate here which specific spiritual traditions and faiths will enjoy growth--at this point in time, it's too early to tell anyway.) Likely it will vary widely by location and culture, because during the era of cheap, global travel, we imported quite a few faiths and traditions, and America has developed some of its own.

All of this isn't to say that we're not going to be having some trying times ahead. We're headed for turbulence the likes of which we haven't seen since the 1930s. That old Chinese curse, "may you live in interesting times," is definitely coming to fruition. Our nation may not survive, if things go badly and (more importantly) if we react badly. We could see America splinter into regions a la Jericho, if too many people opt for a "last man standing" war over dwindling oil and resources. But it doesn't have to be that way, if we keep our wits about us and see the positive in the changes that are to come.

A word on what may seem to be a jarring change of topic. The past couple posts have primarily dealt with the oil and housing situation, simply because this is a blog that focuses on consumers trying to get ahead. Soaring oil prices and collapsing housing values are the twin 500-pound gorillas currently rampaging through the U.S. economy, affecting almost everyone. No microeconomics journal, doomer or otherwise, can ignore them. However, I never intended, nor do I presently intend, for this to become another peak oil/doomer blog or site. The link in the preceding sentence is a great one to follow if you want the hardcore doomer perspective on the American economy in general, and the oil situation in particular. The news section on the site updates three to five times a week.

Oil hit another record high today, and foreclosures are up sharply, so oil and housing will continue to profoundly affect the economy. No doubt these topics will figure into future editions of the allaboutthebenjamins.org blog. But today I'm going to talk about a far lower-profile issue affecting most U.S. consumers, and that is the call centers consumers have to deal with to get anything done with their banks, cell phone companies, mortgage lenders, cable providers, and so on.

Call centers are a ubiquitous, sometimes annoying part of life for U.S. consumers. "Please hold, your call is important to us" is almost up there with "I'm from the government, and I'm here to help you" as one of the least credible phrases in the English language. Pretty much anytime you call a customer contact number for most mid-sized to large corporations (and, if you're calling regarding a credit card, car loan, utility bill or mortgage, you're likely talking to an organization quite a bit larger than Dino's Bar and Grill), you're going to be connected to a call center. Almost everyone has some kind of horror story to tell about a call center; this YouTube video and Internet Help Desk video are must-sees.

But if it makes you feel any better, know that call centers are just as annoying (if not more so) for their employees as they are for those who phone in. Call center workers are significantly more likely to suffer from depression and stress than those in most other professions. Remember that, when your conversation ends and you hang up the phone, your call center experience is over. For the person who took your call, their experience of being micromanaged and stressed out lasts 40 hours a week--or more.

Not that this excuses rudeness or indifference on the part of call center employees, of course. Do remember that, just like it's not your fault the person on the other end of the line gets chewed out for going to the bathroom between breaks, or written up because their average handle time is a minute too long, it's not their fault that whatever happened to get you upset enough to phone in, happened. So wiping that mental slate clean and starting out friendly toward the person who takes your call can go a long way toward getting you the resolution you're looking for.

Preparation is a key to success in getting what you want from a call center. Before you place your call to customer service or technical support, I recommend you do the following:

1. Bear in mind that most call centers evaluate employees based on how quickly they handle your call. Keep this front and center in your mind. Most also require the person taking the call to pull up your account information so that the call can be logged. Anything you can do to speed up that process will endear you to the person taking the call, and reduce the pressure they feel to end the call. So...

2. Have your personal information at your fingertips. This should include your account number with the business in question. If you're calling in regarding a specific incident or occurrence, have the details in front of you: when, where, with what, how, etc. You don't want to recite War and Peace, but at the same time, you want to convey the pertinent details succintly.

3. Reduce the level of ambient noise in the room where you're making the call (or have ready access to the remote control to mute your TV or stereo once the call is answered). Background noise makes everyone's job more difficult.

4. Make sure the phone you're using has decent sound quality, and, if cordless, that the battery is charged. Your 1991-vintage cordless phone with the static and the battery that lasts twenty minutes probably isn't a good choice. If you're using a cell phone, make sure you call from a place in your home where you get at least two or three bars.

5. If you're calling in regarding a malfunctioning device, be in front of the device, or have it in front of you, when you make the call. Make sure you have easy access to the front and back of the device. Be sure you know the device's model number.

6. Resist the urge to be chatty; remember rule #1. If the person you're talking to just doesn't want to discuss the weather, fashion, bass fishing or relationship issues, please don't interpret this as rudeness. They probably are being ridden by their managers like a Preakness winner to handle calls more efficiently (read: quickly).

7. With #6 in mind, know exactly what you want to accomplish with your call, before you call.

8. You may have to wait. Have a good book or other way to pass the time. If you put the phone on speaker, be sure you can get to it quickly once the call is answered.

Once the call is answered, give your information and let the rep pull up your account. Trust me when I say that he or she will work as quickly as possible to get your information on their screen, and if there's a lag...well, it's not their fault their management skimped on workstation specs, so try not to hold it against the rep. In my call center days, I'd joke with the customers that the hamsters turning the wheels inside my computer were malnourished...this probably didn't endear me to management but it got a good laugh out of the clients.

After the rep collects the information and asks what they can do to help you, get straight to the point...politely but quickly, and without loaded verbiage that starts to back the rep into a corner. "On June 2nd, I was assessed a $35 overdraft fee and I want to get that reversed because..." works a lot better than "I'm sick and tired of you [expletive] charging your [expletive] fees every [expletive] day." Note that the first response doesn't pin the blame on the rep...you said "I was assessed," not "YOU assessed." Remember, call center reps don't set corporate policy--they're too busy slamming down their lunches and scurrying back to their desks so they don't run twelve seconds over their allotted break to worry about such fine points.

After you give your request, one of three things will happen. Either the rep will agree and grant your request and help you, or the rep will say it can't be done. Or, what can also happen is the rep may need to get a supervisor. Don't interpret that last as buck-passing; if your request goes beyond the authority of a first-tier rep to grant, then they don't have a choice. Thank the rep, sit tight, and wait.

If the rep says no, try some gentle but firm persuasion, but if you don't make headway within a few minutes, and you feel the rep's explanation for the denial was incorrect or insufficient, ask for a supervisor. Most call-center reps will actually be grateful for your request and accomodate it as quickly as possible. Here's why: time spent arguing with you just raises the rep's blood pressure and, more importantly, increases their handle time (time spent on the call). Long handle times are bad. Most reps would much rather escalate the call to second level or management after ten minutes or so than burn up a half-hour arguing back and forth. Remember also that first-level reps' authority is carefully circumscribed. If they keep denying your request, they're likely denying it because they've been trained--and are evaluated accordingly!--to remain within proscribed limits. In all likelihood, they're not trying to stymie you.

You may wonder, if the rep is tired of going back and forth with you and wants to get off the call,why he or she doesn't just get a supervisor on the line and be done with it. Fair question. The answer (a typical corporate Catch-22) is that many call centers expressly forbid a first-level rep from handing a call off to the supervisor unless the customer specifically asks for one. So if you need a manager, just ask for one and release the rep from the Catch-22.

When you reach a supervisor, do the initial rep a favor by stating up front that you escalated because the rep was unable to handle your request, not because of any shortcoming in their performance. (If the rep should in fact have granted your request but was trying to punt the ball, rest assured the supervisor will chew the rep out after the call is over.) Hopefully the rep briefed the supervisor on the situation, but you may need to restate it. Do so calmly and succintly.

If the supervisor indicates she needs time to consider and that she will get back to you, accept this, but also get her name, contact number, e-mail address, and a trouble ticket number for the call. This tells her that you're familiar with how call centers operate, and that you're not going to let the supervisor weasel out (if that's in fact what the supervisor is trying to do). Often, supervisors do in fact need time to take your situation to their manager or division chief. Ask how long you should wait before calling back in if you aren't contacted. In most cases, 48 to 72 hours/two business days is reasonable turn-around time.

If you still get a negative answer, ask for that supervisor's manager, and repeat the cycle described above. If that fails to get a resolution, the next step will be to ask for phone numbers and addresses for company officials and directors of customer relations.

However, you can get a lot done within the call center itself. The fact is that most consumers do in fact accept a first-level "no" as an answer...which is, unfortunately, the way some call centers are designed to operate. The assumption is that you will take the denial from first-level and walk away. Don't. Be diplomatic, polite...and firm. Make the call center work for you.

As China digs out from its earthquake, gas prices continue to soar, the Presidential election draw nearer, and the world waits with bated breath to find out exactly when Hillary Clinton will get around to realizing she's been beaten, the housing crash has receded to the back burner of the American mind. Some numbers that came out last week confirmed the correction in the housing market is still very much underway.

We have to consider that the government is running out of options to help the situation. About the only step left is to socialize the problem--in other words, make Joe and Jane Q. Taxpayer pick up the bill--through banning or restricting foreclosures, or giving handouts to mortgagees. This really wouldn't solve the problem, but rather it would maintain the imbalance between supply and demand for housing. The only viable, long-term solution is to allow housing prices to fall to market levels. But since that step involves considerable pain for those who bought modern-day $100,000 tulips, the pressure mounts for a political solution. Up until fairly recently, the odds of some kind of socialization of the problem were looking decent.

However, a new crisis is rapidly upstaging the housing correction: the incipient oil shortage. I covered this in detail in my last entry, so I won't rehash all the details of causation here. I will point out that oil is now around $9 a barrel more than it was when I made that post, and that a gallon of gas will set you back about two more dimes than it did a fortnight ago.

The oil shortage is definitely a different kind of animal from the housing devaluation. The housing correction has a market-based solution, and only directly affects those people who bought homes in the past few years and are having difficulties making payments. The oil shortage, on the other hand, has no foreseeable end, and affects just about everybody. The housing correction is not threatening infrastructure and systems civilization relies on for survival. The oil shortage isn't either...but could if it gets more severe.

Guess which crisis is going to get the most government resources (especially once airlines begin failing and the population realizes this is serious)?

The oil crisis makes it tougher for the government to intervene to stop the housing correction. There are only so many dollars the government has to spend helping the unemployed, garrisoning oilfields abroad, bailing out airlines and granting gasoline tax holidays. These are dollars now unavailable to subsidize beleagured borrowers. Adding to this is the perception amongst many Americans that these borrowers brought their difficulties upon themselves by placing a bad "bet" in the casino of the marketplace. The millions of people who saw an asset bubble in progress and stayed on the sidelines are naturally resentful of the idea that those who rushed into the market should have their losses socialized onto the prudent.

Therefore, my prediction is that the housing devaluation is going to go on for at least another year. However, the oil shortage is going to exert an increasing influence on the pattern of decline. Or, to be more precise, high gasoline prices are going to intensify geographic variations in housing price patterns.

Back when gasoline was $2.25 a gallon, long commutes could be justified. Some overworked commuters even enjoyed the long hours in the car as the only downtime they had, between demands at home and demands at the office. As the commuter culture became accepted, the traditional price declines one could find in the suburbs became muted. Housing prices became more uniform as the ubiquitous automobile blurred the lines of geography. During the cheap-oil blowout years of the late Nineties, right here in Northern California, the Bay Area exerted its upwards pull on home prices as far east as Davis and Tracy.

As gasoline passes $4 a gallon and approaches $5 over the next several months, we will see workers less and less willing and able to commute. People are just now starting to realize that these gas prices are not a mere blip on the historical chart, but in fact are going to be around for awhile...maybe longer.

So as that $150 a month gasoline expense of living in the suburbs passes $200, then $300, then $400 and higher, people are going to have to change the way they do business. In the short run, luxuries will be cut, the boss wheedled to allow working from home one day a week, vacations turned into staycations, dinner in rather than out. But in the long run, as fuel prices inexorably climb, something more fundamental will have to give: living so far from where one makes one's living.

This is far less radical an idea than most Americans think. Before the Industrial Age, home is exactly where most people made their living: raising crops, shoeing horses, weaving fabric, and so on. In most settlements all the way back to the Romans, having living quarters atop of or behind your business establishment was actually the norm; the notion that some areas of town were strictly "residential" and others "commercial" would have been laughable, except for the merchants' quarters the larger cities and provincial capitals had.

Indeed, the whole notion of punching a clock, of being under someone else's thumb for a fixed, exact number of hours, is in fact a rather recent invention. Serfdom is nothing new, but even feudal lords seldom bothered to even look at the peasants under them, let alone track their exact whereabouts. The norm has been that people, free or bonded to the land, worked their craft or trade at home, or close to home. Even in America this was the reality for many right up until the post-World War II era established easy motoring.

So as it starts to take a C-note to fill an SUV's gas tank, commuters in the suburbs will find themselves with three choices.

• One, keep working fifty miles away, and work to buy gas so you can get to work.
• Two, move work a lot closer to home.
• Three, move home a lot closer to work.

A surprising number of people will stick with Option 1, at least as long as the food and the toilet paper hold out, until finances brute-force a shift. Option 2 really isn't an option for anyone who works for a medium to large corporation, or even most small ones. Some will quit their high-stress city jobs to get something closer to home, being willing to take a pay cut given that it will be at least partially offset by a reduction in expenses for fuel. However, in a bad economy, people are loath to give up a good-paying job. That leaves Option 3: sell the home and move closer to downtown.

This would have two outcomes. The supply of houses in the suburbs would rise, and demand for houses in the cities and large towns would rise. This means that, as the oil shortage bites, we will likely see the housing correction intensified in the suburbs, and muted in the cities.

Of course, there's another possible scenario. If oil does indeed spike, and gas prices hit $6 or more, we could see a panic. The American culture has always had a survivalist streak running just below the surface, and if that kicks in, we could see an exodus from the cities. More likely, we could see a situation where many wish to leave the cities but find themselves unable to do so for economic reasons. We could see Americans emulating most of the rest of the world, and middle-aged and younger folks moving in with their parents, or elders coming to live with their children. This would increase the supply of houses across the board.

In any event, the suburbs will likely see a more intense correction. What does this mean to you? Really, it boils down to whether you take the optimists' view of the oil crisis (this is temporary, more oil will come online during the next decade and the supply problems will ease), or the pessimists' view (the world has gone into permanent production decline, and energy shortages will bedevil us for many years, perhaps decades to come).

If you are at all a pessimist on this issue, I would advise investing with caution in cheap suburban real estate next year. You'll want to make sure you have a means of making a living at or close to home--preferably close enough to bike or catch the bus. Make sure there are grocery stores and other services reasonably nearby--you don't want to have to drive just to pick up a loaf of bread.

I would also strongly recommend avoiding any home that has a homeowners' association (HOA). While I'm sure exceptions exist, as a rule HOAs are pathological busybodies, and mostly without a clue on energy issues. While we approach a national energy emergency, these assclowns are handing out fines for rooftop solar panels and even putting a standard box fan in your window. This HOA even requires a home "owner" to obtain its permission before putting in a new window. (I put "owner" in quotes because, if you have to get permission to install a window, are you really an owner of the house, or just a glorified renter?)

If we are indeed dealing with a long-term energy shortage, the last thing you need is to invest hundreds of thousands of dollars in a home, only to have a busybody HOA tell you you can't put a garden in your backyard, or a solar water heater on your roof, or a wind turbine on your land. I would hope that in the event of a national energy emergency, Congress would pass a law (or the President issue an executive order) forbidding HOAs from blocking energy efficiency upgrades or small-scale agriculture on what is supposed to be private property, but why take a chance? Before investing in any property, I would recommend making sure there's no HOA, and that the local government respects the rights of landowners to make reasonable changes to their property (some zoning boards out there can be almost as bad as HOAs).

If you're planning to buy in to the housing market, you'll probably also want to check your credit score, and work on improving it, since banks are getting a lot more tight-fisted when it comes to loans. Since credit improvement can be a lengthy process, the time to start is at least a year before you plan on taking out a mortgage.

To play on the words of an old saying concerning the weather, "Everybody talks about the high price of gas, but no one ever does anything about it." Other than complain, hold Congressional hearings, and accuse oil companies and OPEC of ripping off the consumers, that is. But nothing seems to change.

So, the question that lurks in the back of everyone's mind, the one people are almost afraid to ask: are we actually running out of oil? The answer to that one is easy: certainly not. There are still hundreds of billions of barrels of oil in various deposits around the world, some under development, some yet untapped. Almost certainly, oil will continue to be extracted in some form or another through the end of this century, and even after that, some will still be left in subterranean nooks and crannies of distant, inhospitable places.

If we could just take that answer, turn the page, and consider the adequacy of the future oil supply (at least for the next twenty years or so) to be assured, that would be great, but the issue is not that simple. The question above was the wrong question, because the mere existence of commercially significant quantities of oil in some geologic deposit somewhere is not sufficient to guarantee the continuance of a petroleum-driven economy. The right question is, will oil supplies continue to be adequate for oil to remain a cheap, abundant source of energy to all who wish to use it?

The answer to that question is far less certain, and it will not be settled here. If you want to learn more, I would suggest Googling "peak oil" and going from there. No, I'm not trying to get anyone to buy into the peak oil hypothesis. Neither will I discount it out of hand. To bottom-line the situation, reasonable doubt exists as to whether or not the world's increasingly depleted oilfields will continue to produce enough oil for the United States, Europe, Russia, India, China, Japan, South Africa, Canada, South Korea and Australia to all have petroleum-driven economies.

In other words, while it's rather early to go buy stock in the Soylent Corporation, we also can no longer take for granted that oil will remain cheap and abundant enough for all these people--three billion and some change--to have petroleum products that are viably priced to drive transportation, energy, plastics and manufacturing, modern agriculture, and defense. The proponents of the idea that oil production is in permanent decline have made a well-researched, albeit unproven case.

In the short run and sometimes for longer, perceptions and psychology are as important to the functioning of markets as reality. Right or wrong, the notion that we just might be having serious oil supply issues in the near future has escaped from the cellar of science-fiction and fringe groups. This idea, this fear, is now roaming loose in the mainstream. Peak Oil has yet to gain majority acceptance, true. Perhaps it never will, and over the course of the next decade new projects will come on stream and enable oil supplies to go right on rising like they did through much of the last half of the 20th century. But it's out there now, and driving that peak oil beast back into the basement and out of the view of oil markets will take increases in global oil production that simply aren't materializing as of yet. Supply jitters are here to stay, at least for another year or two, probably longer. Possibly for much longer...

Economic fundamentals dictate the long-term price of a commodity is a function of supply and demand. The demand side of the oil equation is even more bullish than the supply. Oil production may or may not be in permanent decline, but demand is on an uphill climb for at least the next generation. New economic heavyweights China and India are now major players in world energy markets, each with around a billion people who would like big cars and fast food just like Americans. While many economists expect China's growth rate to moderate, you'd be hard-pressed to find a reputable economist who predicts anything other than robust growth in energy demand in these countries. Even as recently as six or seven years ago, the U.S. economy drove worldwide petroleum demand. No longer. Even if the U.S. enters a recession, China will merely sell her goods to Europe and the rest of Asia. China's factories will go on humming...perhaps a bit slower, but still generating more than enough wealth for China's modernization to continue at a fevered pace.

So there are the fundamentals: at least the perception of shrinking supplies, and growing demand. The moral of the story: expect oil and its distillates to keep right on getting more expensive. Until substantial new sources of oil are brought online, or demand takes a significant fall, we're in for painful times at the gas pump...and elsewhere.

For America, there is the added dimension of dollar weakness, which makes the situation even more painful. The currency decline, combined with the bullish fundamentals for oil, has the American consumer coming and going.

If the economy grows, this pushes oil prices up as demand rises. But what if the economy shrinks? Historically, the price of oil and gasoline have declined during recessions, as economic activity shrinks and demand decreases. In fact, such easing of energy prices has helped the U.S. economy recover from previous downturns--cheaper gas toward the end of the negative economic cycle was one of the silver linings of a U.S. recession.

Unfortunately, with the decline of the dollar, and the rise of demand from the rest of the world, we can expect no relief from high oil prices even if the U.S. economy falls into recession.

A perverse reality of commodities markets is that the fundamentals for a commodity color the perceptions of events affecting the market. Right now, oil traders are wired to see only bullish news, dismissing news that might indicate any moderation in oil prices. The old joke about the sex-crazed man telling the psychologist that he is the one drawing all the dirty pictures is rather apropo. So if the economy slows, the declining dollar then becomes the focus of the markets, and oil producers demand more money. The outcome: dirty pictures for oil consumers.

One last point: that old chestnut about gas prices falling during election years, driven lower by politicians hoping to get re-elected. While an interesting hypothesis that conspiracy theorists often latch onto, this notion simply isn't supported by the facts. A table of California gas prices shows that in fact there have only been only two election years--1972 and 1992--since 1970 when the inflation-adjusted price of gasoline was lower than that in the year before and the year after. So if you're hoping (with whatever degree of cynicism) that the Republicans get gas prices to fall to try and get McCain into office...well, you can hope, but don't count on it.