Learning From the Oil Shock

The world may have arrived at the equivalent of Peak Oil. Old fields are in decline, while governments limit new oil projects.

We all know that gasoline is at $4 a gallon and oil is at $135 a barrel. But if you think that’s the end of the story, don’t talk to economist Jeffrey Rubin of CIBC World Markets. By Rubin’s reckoning, we’ve barely passed the halfway point on a steady march upward that will take gasoline to $7 a gallon and oil to $225 by 2012. Though there will be fluctuations, the underlying rise in prices, he says, will have pervasive and often surprising side effects. Among them: