Oil prices continue to surge to new records. A barrel of light sweet crude peaked above $123 on Wednesday. Gasoline is selling at a national average of about $3.60 a gallon, according to AAA. And according to the Energy Department, prices at the pump will surpass $4 a gallon this summer.

This is all old news. The bigger question is whether or not the economic fundamentals of rising prices will reduce consumption. According to a new monthly report from the Energy Department, the answer is yes. The Energy Department is projecting that domestic gasoline consumption will decline by about 190,000 barrels a day this year. Add increased use of ethanol, and the overall petroleum tab will drop by 330,000 barrels a day—the first annual decline since the oil price shocks of Iraq War I.

This reduction of oil consumption, and the concomitant decrease in greenhouse gas emissions, might resemble a silver lining in the dark clouds of economic recession, climate change, and fragile energy markets. But wait. Those 330,000 barrels of oil account for less than 1 percent of total gasoline demand in the United States. More importantly, while U.S. consumption takes a dip, global oil demand is projected to rise by 1.2 million barrels per day. This year, China alone will add 800,000 barrels a day to its consumption levels.

What does that mean for you and your experience at the local filling station? Demand will continue to outstrip supplies, pushing oil and gasoline prices even higher. Goldman Sachs sees the price of a barrel going past $150 and heading toward $200. Other industry analysts predict $7 at the pumps in the next few years.