Q: Will we see $3 gasoline before we see $5?

Short-term dip in oil prices will not offset long-term increases

A: “Who knows?” and “It doesn’t really matter.” Much higher gasoline prices that are sustained for a long, long time are now inevitable.

The fundamentals in the oil market are that we are in the beginning stages of peak oil. Supply can no longer keep up with demand, which keeps soaring even in the face of record prices. The U.S. Energy Information Administration has the surprising statistics [PDF]:

Preliminary data indicates that global consumption rose by roughly 500,000 barrels per day (bbl/d) during the first half of 2008 compared with year-earlier levels, as a 1.3-million bbl/d rise in consumption outside of the Organization for Economic Cooperation and Development (OECD) was partially countered by an 800,000 bbl/d drop in U.S. consumption compared with year-earlier levels … Total world oil consumption is expected to grow by a little over 1 million bbl/d during the second half of 2008 and by almost 1 million bbl/d in 2009 compared with year-earlier levels.

That’s right, even after “the largest half-year consumption decline in volume terms in the last 26 years” in this country, global demand continues to grow 1 million bbl/d each year. Why?

Grist