A recent telephone survey found that 67% of American drivers have changed their driving habits in response to rising gas prices. A robust 85% say they will change how they haul-ass down the highway when demon gasoline hits $5 a gallon.

At what point do the laws of supply and demand cause prices at the pump to decrease or stabilize? In a game as rigged as this one, who knows. Congress just failed to pass a cap and trade climate bill that reveals that the good ol’ oil boys are still at the wheel (see G.W. recently waltzing hand-in-hand with the Saudi Prince above).

Newt Gingrich and some like minded oil-buddies are passing around a petition to fast track oil exploration and drilling in the USofA to reduce our dependence on foreign petrol. Are green leaning Americans, beaten down by the prices at the pump, tempted to grasp at these Bushian fear-based solutions which call for increased off-shore drilling and exploration, and the opening of Alaskan wildlife refuges and protected lands to big oil producers? With an economy in the crapper big oil has created the leverage to help coerce Americans into choosing a new energy direction. With an impending presidential election featuring two cap and trade proponents, perhaps this will not play out in favor of fossil fuel proponents.

The real question is why are prices so high? Suspects abound, beginning with oil speculators in the commodities markets driving up oil prices to create profits comparable to those formerly available to them in the go-go 90’s stock market and the recent real estate mortgage bubble. With no real regulation in sight — we may just have to wait for this bubble to burst. (more)

The U.S. Energy Information Administration actually says there’s 2.5% more gas available this year than last. Crude supplies are down 10% from last year but still remain at historical averages. Refineries are operating at less than 90% capacity with no new construction planned (who wants an oil refinery next to their beach front condo?). It all adds up to short- and long-term trouble.

Can state-run oil pumpers like Saudi Arabia, Russia and Venezuela react to our pain, and regulate themselves, or will markets self-regulate due to vagaries of supply and demand in some Reganesque free-market fashion? Not likely. What would most businesses do if they had a product in finite supply over which they controlled both the source and production. Answer: Control supply to maintain high profit margins while slowing consumption just enough to extend their reign. A win-win — sell less product at a higher profit margin.

This ugly situation for consumers will probably play out in a slow dance of lower gas consumption and incremental production increases as the oil producers try to balance profits, public relations issues and consumer loyalty. It’s time to stop focusing on trying to lower gas prices short-term (we did this in the 70’s and here we are again). Time to call the oil boys bluff and fast-track the development of alternative energy tech, hybrid car design and adoption of a new, greener perspective on all issues energy. We’ll be safer, warmer and breath easier in the long run.

Oh, one last thing. That phone survey on changing driving habits revealed that 10% of drivers won’t change their gas guzzling approach regardless of prices at the pump.

(Bush photo via: slate.com)