Today’s high oil prices could be here to stay

On Thursday, Spain entered its fourth day of a truckers strike, which has snarled roads and led to the arrests of 71 people.

Meanwhile, protest groups in Malaysia vowed to push ahead with mass demonstrations against a 41 percent increase in gasoline prices. There have been similar protests in South Korea, Belgium, Thailand, Scotland, Poland, the U.S. and elsewhere.

French President Nicolas Sarkozy has urged his EU partners to suspend part of the value-added taxes, but his proposals have found few takers in other European capitals. Nor has Italy been successful with its proposal for a "Robin Hood" tax on oil profits.

"In the short term, changes will be seen mostly in the actions of the consumer," said Manouchehr Takin, an analyst at the Center for Global Energy Studies in London. He predicts an even smaller increase in demand than the IEA.

The high crude prices have begun to force changes that will not soon be reversed.

General Motors Corp. is closing four North American plants that make trucks, as more consumers look for smaller cars, which are often manufactured overseas.

Americans, the world's largest gas guzzlers, are also buying less gas, which hit another record on Thursday, the latest in a string of all-time highs.

Businesses are restricting travel and opting for teleconferencing to reduce costs, as well as trying to pass some of their increased fuel bills onto consumers.

Airlines have raised fares repeatedly, but can't cut costs fast enough to cover the rising cost of fuel. Southwest Airlines recently revealed it is flying slower and will save $42 million in fuel this year by extending each flight by one to three minutes.

Saudi Arabia, the world's largest oil producer and the most influential member of the Organization of Petroleum Exporting Countries, believes the sustained high prices will eventually slacken the world's appetite for oil.

OPEC has been reluctant to increase production, arguing that prices are being set by speculators, not oil availability.

That view is supported by Paul Stevens, a researcher on the energy, environment and development program at Chatham House, a London think tank for international affairs. He said prices could "come down very quickly or very significantly" by as much as $50 a barrel.

But there is a divide among industry analysts and policy makers, some of whom said only one thing has driven oil prices throughout history: demand.

The U.S. Energy Department said prices at the pump will probably stay around $4 per gallon through much of next year.

In 2009, crude oil is expected to average $126 per barrel — $4 higher than this year, the head of the federal Energy Information Administration told lawmakers this week. The Energy Department said there may be a brief dip in crude by 2010, but the long-range expectation is for more expensive oil.

"This looks different," said Novak, of Global Insight. "Price spikes in the past were event driven, and that does not appear to be the case here."

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