Oil Prices Are VariableWhile we suffer through oil prices that are historically higher than ever, we tend to forget some basic principles. Zero Base Thinkers never forget that the common knowledge is always wrong, but we are in the minority. Pundits have taken to declaring that "gas prices will never get back to where they were," but this flies in the face of proven reality.
Petroleum, as indeed all commodity prices, have historically followed a boom and bust cycle. Historically petroleum prices tend to cluster around about twenty dollars per barrel, or a half a buck a gallon, as can be seen here. These prices vary upward during extraordinary periods of history, especially geo-political events concerning the Middle East, where much of the world's oil is produced. That describes the recent times pretty well, but is not a prediction for the future. With the prospect of a deal between Syria and Israel becoming more real by the day, that pressure on oil prices might just be moving further away. If only some resolution of the Iran situation could be found, there would be no reason that we might not see twenty dollar oil again.
It is hard to go up against such clear thinkers as Michael Medved, but believing that oil prices will never go down would make us marks ready to buy stock in the Brooklyn Bridge. Others say that oil prices might go down to $80, but that might well be not ambitious enough. History should reassert itself, as Frank Fukuyama found, to his dismay. Before you buy yourself a hybrid car or a subcompact, prudence dictates waiting for events to unfold.