Still lower gas prices - but for how long?

Latest government survey has the average price of regular in the L.A. area at $3.846, about a 4 cent drop from the previous week. The bad news is that oil prices are back up, settling today at a little over $97 a barrel, up several dollars over last week. Those prices have been quite volatile, so don't be surprised if gas levels off or even increases. Barron's Economics Editor Gene Epstein has a more unnerving forecast: $150-a-barrel oil by next spring, spiking to as high as $170. That would easily raise the price of gas in L.A. to more than $5 - perhaps even close to $6.

The dynamics of both the first (2007-08) leg of the bull market and the second leg, likely to begin this year, are essentially the same. The thirst for oil by non-OECD nations puts pressure on supply, and the increase in output from non-OPEC producers is inadequate to quench this demand. Since 2000 -- despite the post-9/11 economic downturn, the global stock-market swoon of the early 2000s, the 2008 financial crisis and the 2008-2009 Great Recession -- global oil consumption has advanced by a yearly average of 1.1 million barrels per day, while non-OPEC output has risen by a yearly average of less than 0.6 million per day. In 2000, non-OECD demand amounted to 37.7%, or a little over a third, of the world's consumption; now, it amounts to 48.5%, or nearly half.