"Things have a way of working themselves out."
I'm not sure what you mean when you say "working themselves out." I remember when gas was 25 cents a gallon. And I'm not all that old, either.
It's funny how things "worked themselves out" in that instance.
I don't think the problem is going to solve itself. I'm thinking the cost of gas will be in excess of $5 a gallon at the end of the next ten years, possibly in excess of $10 a gallon if the Chinese and Russians build cars as fast as we have.
What has been the inflation rate in the last 45 years?
Run the numbers yourself - from 1960 to now, at a rate of only 5%, the price from $.25 should be $2.25 now. Hey! I bought it for $2.17 last night! Not a bad deal!
Bought a loaf of bread for $.45 lately? No? Well, at that SAME 5%, it should be about $.45 now.
So, Frohickey and Adam Smith are both right. Things DO often have a way of working out.
I remember when gas was 25 cents a gallon. And at that time you could buy a loaf of bread or a pack of cigarettes for 25 cents. In constant dollars gas isn't that much more expensive. I also remember filling my tank up 1998 for 99 cents a gallon.
If oil ever reaches $10 a gallon, the Chinese economy will stall and begin retrenching rapidly. They need cheap oil to raise the standard of living for their 1bn+ people.