Gas Price and Chaos Calculator

Where are gasoline prices headed? Late last year various pundits predicted that we'd see $100/bbl oil early in 2011 and $140/bbl oil by mid-year. It looks like their predictions were correct. Gasoline prices are non-linear but I took a stab at predicting gasoline prices as a function of WTI oil prices. The results matched summer 2008 prices pretty well. So I think the extrapolation is a good first approximation.

If the pundits are correct we'll be paying $5 per gallon this summer. That's a 100% increase in fuel costs that will reduce everyone's disposal income, increase prices for everything and probably tank the economy. It helped drive the economy off the cliff in September 2008 and will probably do the same this year.

The question is, do events drive oil prices or does oil price drive events? Are north african and middle east revolutions driving up oil prices or has the declining value of the dollar pushed up the cost of oil? If pundits predicted the oil price increase before the revolutions then this fact suggests the revolutions are not the cause. In fact, the revolutions may be an effect of Bernanke printing down US debt.

If the revolutions are an effect of high prices and lack of opportunity due to policies of the Federal Reserve and other central banks, what is going to happen as we spin deeper into the abyss? We are witnessing political unrest in Wisconsin as the state government attempts to deal with the Depression. Will we see revolution here next as prices escalate and opportunity declines?

The eroding value of the dollar is a huge, backdoor tax that is strangling everyone and threatens global chaos.