oil companies buy the oil overseas, and the price there is set by a variety of forces and personalities. But it really doesn't matter, once the oil gets here, our companies and distributors sell it and it is in their interest to keep prices and demand as high as possible, BUT not so high that people start economizing or looking for substitutes.

They don't care what they have to pay for the imported oil (or the domestic, for that matter!). They will sell it and they will make a profit. And the more they pay for the oil, they will just pass the costs to the consumer and their profits will increase proportionately. They have no incentive whatsoever to break this cycle, which was the original point I was trying to make to REB. In fact, they have every reason to extend it as long as they can.

Domestic discoveries will not change the price, for reasons I discussed earlier, so the only other national alternative (other than pray for a miracle) is to discourage consumption either by taxation or legislation. And this will always be opposed by the distibution industry because it will cost them money. Sure, eventually, consumption will drop precipitously as the economy shrinks and people start doing without. But business doesn't think that far ahead. The best we can hope for is that the Saudis will open the tap just enough to keep us afloat to maximize thier income. The Saudis are businessmen, their behavior is predictable, but that regime is not very stable.

Unless some technical breakthrough in alternatiive energy is imminent, something they can quickly invest in and take advantage of (and you and I know there isn't) the oil companies want things to stay just as they are for as long as possible.

And of course, no one anticipated China and India as new consumers, or Russia as a new producer.