The price of gasoline could get ugly in 2006

In 2005, before Katrina, the price of gasoline had already been on the rise. According to experts unexpectedly higher demand for oil from China disrupted the delicate balance of world wide oil supply and demand. Consequently, when Katrina hit the Gulf, disrupting the even more delicate balance of U.S. refining capacity, gas prices skyrocketed.

If a cold winter followed, energy analysts warned, things would not only get scary regarding natural gas and other heating oils, but the gasoline problem could also worsen.

So, was America lucky we've had a mild winter? That depends.

According to weather forecasters, the same weather patterns that have kept our winter warm, are the same weather patterns that breed hurricanes.

With gas prices already up more than 50 cents compared to last year, what happens if Chinese demand again exceeds expectations, or another hurricane wipes out a number of Gulf refineries?

As if that were not enough, Nigerian 'rebels' are attacking oil platforms in that country, the fifth largest exporter of U.S. oil (more).

But that's an insignificant problem compared to Iran.

Last week, Manouchehr Takin, of the Centre for Global Energy Studies, argued that crude prices could hit $100 a barrel if Iran stopped exporting. "Supply and demand are very tightly balanced," he said.

When it comes to energy, America is now playing Russian Roulette, and chances are America is going to get burned.

Unfortunately, it won't be just high energy costs affecting drivers and slowing the economy if all these events unfold. Sustained $100.00 oil could have devastating consequences for both Ford and GM. Even today, several years since 9/11, the success of these two auto companies is still intrinsically tied to the sale of gas guzzlers.

Sure Ford has the Mercury Mariner hybrid and the Ford Escape hybrid, but GM has yet to put a full hybrid on the road, thus, they can put out about 25,000 hybrids combined.

How many warning signs does it take to realize the world has changed and gas guzzling is no longer acceptable?

In the 90's Congress perceived this problem, that's why they gave the Big 3 a billion dollars of TAXPAYER money to develop fuel efficient vehicles. The Big 3 even developed hybrid cars, but decided they had no future. I guess when you're making $10,000 in profit per gas-guzzler sold you don't think much about the future.

Ironically, even today, both companies are still pushing muscle cars in an attempt to generate new buzz around their companies.

Are the Big 3 still that blind?

How many more times can they pull the trigger before their luck runs out, and will Americans be willing to stop the bleeding if gas hits $4.00 or $5.00 per gallon. Will it be too late then?

When it comes to gasoline, 2006 could get real ugly.