Will gas hit $5 per gallon?

Apparently it already has at a gas station in the Bay area! National average for gas is over $4 and most of us are feeling the pinch. I have a 80-mile commute each day and the gas prices are killing my budget. Many are beginning to work from home or changing jobs to find something closer. Many economists are predicting the price of crude oil will hit $200 a barrel - how does that translate to gas prices? Refiners have to purchase crude oil and the price of gasoline. Generally, price of oil goes up or down based on supply and demand. Though many believe that new economies such as India and China are driving up the prices due to renewed is demand, the truth is that prices are being artificially driven up due to investments in oil futures. Many funds and institutional investors invest money in the US treasuries, however, with the dollar falling the investments are moving to more lucrative types such as gold and oil thereby driving up the prices. This in turn is driving up the price of crude oil due to the artificial demand created by oil futures. I am not sure what could be done to stabilize the situation other than maybe to start stabilizing the US dollar. As investors move back to the US treasuries with the strengthening US dollar, the gasoline prices are bound to come back down.

Many believe that the gas companies are so greedy that they will not reduce the prices even if the price of crude oil goes down. This may be true for some time, however, eventually they will have to reduce the prices or people are going to drive less and less. I have heard many people get upset at gas station owners due to the high prices at the pumps- it’s really sad that the gas station owners only make 3c-4c per gallon of gasoline. They really don’t have much margin to play with - therefore, there is really no point blaming them for the high prices.

Personally, I am definitely starting to work from home couple of days a week. I am considering other options such as hybrid cars, hypermiling, etc to save on gas. What about you? What are you doing to cope with the high price of gasoline?