The Sunny Side Of High Oil Prices

If the prospect of paying $4 a gallon for gas is pretty unpleasant, spare a thought for consumers in Europe, who also have to contend with higher taxes. That means drivers in the U.K. pay a whopping $9.50 a gallon, reports CBS News correspondent Sheila MacVicar.

"It's ridiculous, really," one British motorist said. "It's getting to, 'is it really worth having a car?'"

What makes this surge in the price of oil different from past peaks is that it comes as consumers are already trying to cut their fuel consumption.

"In Western Europe and in the U.S. at the moment, oil demand is actually year-on-year falling," said Leo Drollas of the Centre for Global Energy Studies.

But oil-producing nations have cut production and the booming economies in India and China are soaking up any shortfall in demand.

Just as the price of a barrel of oil has been rising - from $56 a barrel in October 2006 to more than $110 today - the dollar has been dropping: Worth 80 Euro cents a year-and-a-half ago, and just 64 Euro cents today.

The dollar has lost value because the Federal Reserve continues to cut interest rates, the U.S. trade deficit is growing and international confidence has been shaken by the U.S. credit crisis.

A lower dollar helps makes oil a very attractive investment.

So in the commodity houses, the talk is of hot money flooding into the market: Pension funds, hedge funds. And speculators, they've pushed prices up by 20 percent.

The good news? Prices, say analysts, are unlikely to stay this high as demand slows and Saudi Arabia thinks about increasing supply.

The bad news? They're not coming down yet.

Pity the poor cabbies. They have no choice but to take these prices in stride.

"They're scandalous, but what can you do? You've got to have fuel," cab driver Jeff Thomas said. "If you don't have fuel then you don't work. As simple as that."

The message from Britain to consumers in the U.S. is as simple as this: Get used to it!