LA Times says gas may go over $4 a gallon

The LA Times says gas may go to more than $4 a gallon next year.
http://www.latimes.com/business/la-fi-gas27dec27,0,7315706.story?coll=la-home-center

Since it does look like that from here on demand will outstrip supply, we are coming to a major transition in the Age of Oil. The Oil War has been going on for a century now; it is nothing new. (The US is currently doubling its emergency reserves, even though the price is near a historic high, because they know something is coming, and that something is not good. Oil demand usually drops toward the end of the year, but this year it just kept going up.)

Major oil fields like Mexico's Canterell are seeing unbelievable drops in production, and there is little replacement capacity coming online. Mexico may cease to be a major oil exporter to the US in just a few years.

Drilling in Alaska preserves will not save us. That would run the world for a few days. Brazil recently announced a 10 billion barrel discovery. Wonderful. That would run the world for about 4 months. And there hasn't been a discovery like that in decades.

Many say that the price of oil drives the supply of oil, so don't worry: as the price goes up, the supply will go up. But I think this is clearly wrong. It is the supply that is controlling the price, not the other way around. In the 70s and 80s, technology became available that allowed a lot of oil to be discovered and pumped out. After the oil crises, the UK, Sweden, Norway, and Denmark used technology that had just become available to pump the oil and gas out of the North Sea. That oil and gas, and oil and gas that became available elsewhere due to the same technological advances, were suddenly available, breaking the stranglehold of the oil exporters. That and improved efficiency dropped the price to $10 to $20 a barrel for decades. But be careful what you wish for. I think we will come to see this as not necessarily having been a good thing in the long run. Although over the last 30 years the anomalously low price produced the biggest economic boom the world has ever seen, for the economy to continue the way it is requires that the energy supply continue to grow, or at the very least not decrease. That is looking progressively unlikely.

Basically, the nonfrozen land area of the Earth and the shallow offshore areas have all been searched, and everything huge has been found. There may be more large fields in deep water to be discovered, but compared to finding the oil that was produced for the last century, this is going to be really difficult.

Basically, oil is so useful and contains so much energy that everything around us (including us because the food that we eat is provided by using huge amounts of oil) depends on continued supply. The Population Bomb may not have been avoided, just delayed, and made very much worse by all the cheap oil.

The good news is that technological advance should really explode over the next 20 years, and we may figure out how to produce really good photovoltaic panels and batteries to run vehicles.