2008: When your hybrid vehicle will really pay off?

Gas prices are dropping. I don't really need to tell you that. Already, after just a couple of months, interest in fuel efficiency is also dropping.

So, are cheap gas prices here to stay?

Probably not according to most energy analysts, and unlike past valleys and peaks in gasoline prices, the distance between each valley and peak is likely to shrink as we trend upwards.

According to some, the next big threat to American gasoline prices is Russia. If you haven't noticed the influence of Russian oil, you soon will as Russian gas stations open in your neighborhood. That's why 2008 could create the highest gas prices we've ever seen.

"And it's my memory of how traumatic those transfers of power used to be that leads me to pick 2008 for a Russian oil supply shock. That year will be filled with uncertainty and rumor, as the question of who will run the country rises to the top of the agenda for overseas investors and purchasers of Russia's oil. Even if, as I think is almost certain, power remains with Putin or someone in his circle, the uncertainty will be enough, with oil supply and demand in such precarious balance, to give the oil speculators plenty to work with." (more)

The recent rise in gas prices was driven by speculation, not George Bush. Americans must get this through their heads. Electing a Democrat as President isn't going to change foreign oil market speculation.

Imagine continued and escalated problems with Iran, Chinese oil grabs, hurricanes and turmoil in Russia all happening at the same time - the perfect storm. Oil could easily surge beyond $100 per barrel. Even worse, imagine war in the Middle East. In such an event, $100 oil would seem cheap.

The dynamics driving oil speculation aren't really improving. Sure they are now calm, but new storms are building. When those storms hit land, hybrid vehicles will really pay off.