Over here too (India) gas (we call it petrol..) prices are soaring upwards. Currently it's at Rs. 41/Litre which works out to around, $3.52/gallon.
I don't mind the prices that much because I ride a motorcycle which gives me decent fuel economy. One gallon on that would take me approx. 200 kilometers = 124.27 miles.
I do agree that when oil prices go up other prices will definitely go up. Not mainly because we need oil in everything but because all goods are shipped inside countries usually via trucks. And trucks use oil. So if providing goods to a particular area becomes expensive, the goods themselves will become expensive...