Thanks for the lengthy well reasoned and seemingly industry insider reply. I was curious in what others thought drove the prices up so much so quickly, didn't seem anything changed that significantly. What I would hope to see come out of this is some investment in alternate sources of energy. I would think at the current price levels, some alternatives become practical; bio-diesel, propane, hydrogen, ??. IMO, I don't think the hybrids will ever be a good engineering solution.
Perhaps necessity can mother another invention.
Many alternative fuels require a greater energy investment than they yield. It takes more petroleum to make the equivalent amount of ethanol (in terms of fuel value) for use as a fuel.
While that may work as an emergency fuel source, it is no long term solution.
Alternatives must show a net energy gain in order to be effective, and the eqution has to include the energy invested in the production of the fuel.
While there will be alternative technologies, for these to remain competetive, the price of petroleum must stay up, and if they are discarded, the price will go back up. Expect the economic equilibrium to happen somewhere at or above current prices.
For the long term, I would structure my household budget for $3.50 gasoline, if it is less, then you have some change in your pocket, if it is more, you will not hurt as bad as the folks who figure on $2.50+/-