Let me cut to the chase. Here’s the headline I woke up to this morning:

Matt Drudge’s affinity for large red headlines makes sure we can’t miss it: We broke a new record!

Oh, great. As a result, the Dow Jones has tumbled about 130 points from this news and the news that insurance giant AIG posted a loss of 7.81 $BILLION. And you thought Fannie Mae was bad. Just as interesting, Exxon Mobile shares have dropped by over 1% in trading as of this post. High oil prices work in their favor, but not exorbitantly high oil prices. At some point, consumers will change their behavior tremendously and there will be major adjustments to be made.

Okay, so we all know that gas prices keep rising and that it’s not good for the economy. But have we thought about the longer term? Philip Brewer of Wise Money has, and reading it might make you shiver. To summarize:

• What if gas prices keep skyrocketing? It was $2.59 per gallon in 2006. It’s nearly $4.00 now. If that trend continued, you could see $10 dollar gas in the nexdt several years. Now, I don’t think that’s likely, but even $5 or $6 gas scares me.
• SUV resale value has plummeted. No surprise there: people are (finally) switching to more fuel-efficient cars.
• It’s time to start planning. How far do you live from work? Is getting a more fuel-efficient car a necessary investment? Should you work remotely?

Oil prices and its rapid inflation worry me greatly. Skyrocketing oil costs could by itself hold the economy back. That reality has even hit Exxon’s stock, which has slid to its lowest level since April. I suggest reading the Wise Bread article and planning for an era of high energy prices. It may just be wishful thinking that the prices will ever drop back down to even $3.00 a gallon.

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