The price of oil per oarrel have reached record levels. Last Friday, the Nymex Crude Future hit $118.52 a barrel. The prices at the pump are acting accordingly. The Safeway down the street from me has 89 octane @ $3.95 a gallon.

My first reaction was “Oh crap, this isn’t going to be good for anyone”.

My second reaction was, “Go baby, Go!”. I want to see the market force innovation to happen around transportation and energy consumption. I want to see more fuel efficient cars, more alternate energy cars, better public transportation options and a reduced dependence on oil.

Just last week, the Department of Transportation is requiring auto makers to meet a 35.7 miles- per-gallon fuel standard for cars by 2015, while light trucks will have to meet a standard of 28.6 mpg. The response ,,,

Auto makers called the rule tough, but said they will comply. “Four and a half percent over this period is very aggressive,” said Edward Cohen, vice president of government relations at Honda North America. “This is requiring two to three times the normal technology improvement than what we have historically had.”

Give me a flipping break you wimp! This is what you need to do, make it happen. It’s not like this is a surprise!

That’s why free market economies are so great. As the prices of oil go up, the consumer will demand more fuel efficient cars and put pressure on governments to beef up public transportation (Maybe we’ll get the BART to go all the way around the bay).

And another byproduct could be more folks moving closer to big cities. In Business Week this week, there was an article entitled “Good-Bye Cheap Oil. So Long, Suburbia?”.

Cheap oil is what made suburbia possible. But we’ll run into problems with spot shortages. As we get into trouble with these supplies, our economy will suffer. Major instabilities in the system will present themselves much sooner than we are led to believe. And by that I mean the way we produce food, the way we conduct commerce, and the way we move around.

Let’s see what happens. In the meantime, go oil go!