The sub title is a loaded question.  The answer depends upon who you are.  If you are an SUV owner who commutes 100 miles a day to and from work, you bet your bippy it is!

If you are an environmentalist, you can about guarantee they are jumping for joy as the higher prices will inevitably force conservation and inevitably reduce consumption.

But who are the other stake holders in this run up of prices?

One that many would scream as being the recipients are the oil companies and indeed they will profit well in the short term.  But like a candle burning at both ends, it will burn bright for a short while, but not burn as long.

In the end, the clear cut winners will be alternative energy sources, and ...... yes, the US.

The first victor in this run up of oil prices is easy to see.  The reason Alternative energy sources have not gotten a lot of notice or use is one of simple economics.  Oil was just too cheap and the alternatives not cost effective.  But with Oil over $50/barrell and threatening to go higher, all of a sudden Hydrogen, Electricty created by non-petroleum generators and solar power (to name a few) are becoming more competitive.  And indeed they will now be more research and exploration on how to make those and others a viable alternative.

But how is the US going to profit from this situation?  That is not as clear, but the answer is also as simple.  For the simple fact is that oil is not only used for fuel, but in the construction of almost all plastics, so weening the world from total use of oil is not going to happen for a long time to come.

So where are the alternative sources of oil going to come from?  From Shale Oil (that is not a clam shell oil company by the way).

Shale oil is a misnomer.  It is not really shale and it is not really oil.  Instead the 'oil' is actually kind of like 'unborn' oil.  It has not undergone all the geological stresses to make it into a useful fuel source (altho it is being used in some countries as a dirty and sooty one).  It must be treated first, and that will require a lot of heat and water.  Hence the reason it has  not been exploited before.

But as the cost of processing the shale oil into a viable energy source has gotten (relatively) cheaper and the price of crude has gotten more expensive, it is rapidly becoming a viable alternative and one that the proven reserves dwarfs that of all known crude reserves.

And who is sitting on over 50% of the proven shale oil reserves?  The Energy monster called the USA!  Yes, this energy dependant (and some would say wasting) industrial behemouth called America is sitting on a potential gold mine of energy resources.

Is this a big secret?  Do you really think that Saudi Arabia was trying to help reduce the cost of crude for OUR benefit?  No, it is widely known, and Saudi Arabia, perhaps alone among OPEC, knows that if other sources of energy are developed, their stranglehold on world markets will evaporate over night.

Is this a perfect scenerio?  Not by a long shot.  The industry to extract the oil from shale will need to be ramped up, so it will not happen over night.  And as the old cliche goes, it is going to get a lot worse (price wise) before it gets better.  Plus there are environmental issues that will have to be addressed and solutions created to get this pre-born oil.

But in the long run, what no environmentalist, democrat or republican has been able to do, i.e. ween the USA from dependance on foreign oil, simple Market forces are going to do for it.  Yes, some may say that China, finally emerging into the 20/21st century is playing a big part.  But that was only a matter of time as well (you cannot keep 1.5 billion people living in the dark ages for ever).

So the next time you go to the pump and pay that $2, $2.25, $2.50 (or like in most european countries) $5 and $7 per gallon, remember.  It is actually a good thing. But like medicine to cure the disease, it will not taste good going down.