Gas Prices Creep Up: Oil Supply Crisis in the Offing?

Gasoline prices have gone up quite a bit in the last few weeks here in the Boston area, from about $1.69 per gallon to $1.89 per gallon. What gives?

What will become of us if we are hit with an energy crisis on top of this horrendous, Depression level economic crisis?

First of all, gas is still very cheap for the beleaguered U.S. consumer compared with Europe. Gas is more than three times more costly there. But clouds are gathering on the horizon.

The New York Times reported back in December 2008 that "dozens of major oil and gas projects have been suspended or canceled ... as companies scramble to adjust to the collapse in energy markets [meaning the price of crude oil]."

This means that all those oil derricks that were sprouting up all over places like Texas, Pennsylvania, and North Dakota have ceased operations, not to mention big exploration and drilling projects throughout the world. What looks like a good deal at $147 per barrel suddenly does not make any sense at less than $40 per barrel.

As a result, it is just a matter of time before supply constraints send the price of the Western world's precious oil upwards again.

That is just what the realing economy needs, right? High energy costs. Actually, yes. This is a golden opportunity for the U.S. and other countries, when oil demand is historically low, to begin weaning themselves from this heroin-like addiction, via conservation mainly (smaller cars, better trains, telecommuting, eating locally grown food, and the like), before the unfortunate implications of a loss in oil supply become the second really bad crisis to come true.