GETTING THERE: Drop in gas prices only temporary

In the midst of a grim economy, lower gas prices have been a small but real comfort.

Just don't expect them to last forever.

That's the new-year prognostication of Harlan Ochs, a gentleman who has been in the oil and gas business for 51 years. He and brother Ken co-own and manage Acorn Petroleum, a fuel and lubricant distributor that counts the city of Colorado Springs among its clients.

"I would bet $5 - and I'm not a gambling man - that in the next two or three years we'll be back where we were in July (when gas prices soared above $4 a gallon)," Ochs said this week. "People should say, ‘I'm getting a temporary and very welcome respite from high prices. But I'm not going to be lulled into thinking I'll see $1.44 a gallon prices for very long.' "

Over his five decades in the business, Ochs has seen a few breathtaking run-ups in gas prices before.

But there was something different - and something more profound - at work during the latest spike that saw gas prices doubled in a matter of months, Ochs said. It was a glimpse into our future.

Ochs said for 50 months before July, demand for oil worldwide exceeded the ability of oil producers to supply it. Only the recession that started in the U.S. and quickly spread across the globe stopped the rise in gas prices - and he believes that will be temporary.

Yes, Ochs said, there were external factors that helped push up prices during the last four years - guerilla attacks in the oil fields of Nigeria; the bully-boy tactics of Venezuela President Hugo Chavez, who would love to use that country's oil reserves to harm Yanqui imperialists; and speculation on oil futures, which he said probably took prices higher - and now lower - than they ought to be.

But fundamentally, he said, the latest rise in gas prices was a foreshadowing of the inevitable: the end of oil as the world's main energy source sometime this century.

"As our economy comes out of the downturn and as Western Europe and Asia come out of the downturn, you're going to see oil fueling economic activity again - and that's going to push demand beyond supply limits," he said. "The world is not going to be able to shift its energy use from crude oil quickly enough to affect demand and keep us from seeing higher prices."

Ochs isn't sure what forms of energy will replace oil - none he sees now are yet capable of supplanting petroleum.
"There are 150 million vehicles in this country, and all but one million are using gas or diesel," he said. "We're not going to stop using oil tomorrow."

In the long term, he said, solar, wind and battery technologies need to be improved; nuclear energy needs to be embraced; and more efficient and cost-effective bio-fuels need to be developed. As a bridge, he said, this country's oil refining capacity needs to be expanded, along with exploiting cleaner coal technology and domestic oil and natural gas reserves.

In the short term, Ochs said folks should enjoy the cheap prices at the pump - but gird themselves for record prices once the economies of the world rebound and countries such as China and India demand a greater share of a finite supply of oil.

"I think as people make longer-term decisions about buying a car or truck, they should make them with the thought they need to have more fuel-efficient vehicles," he said. "Remember the fundamentals: It's all about supply and demand."