A few weeks ago, I warned that pain was coming to the pump as gas prices were set to climb. Sure enough, wholesale prices have climbed 17% from their December low.

The catalyst was a closing of the disconnect between crude oil and gasoline. There was just no way Big Oil was going to let its downstream refinery margins stay pinched. Crude oil climbed in October and November on Wall Street speculation and a weaker dollar and has remained elevated on geopolitical concerns and Iranian saber rattling. Gasoline kept dropping during the period but has since made up for lost time.

Things are about to change as crude oil drops out of its recent trading range and the dollar stabilizes. With this looking to be the beginning of a new downtrend, it should take the upward pressure off gas prices.

For one, the pressure between the West and Iran has ratcheted down a notch. The International Atomic Energy Agency announced Wednesday that it had made a "good trip" to Iran to discuss Tehran's nuclear program and would return soon. The chatter is that Iranian leaders are trying to reopen talks with the West as the European Union and the United States place sanctions on Iran oil exports.

Although this is likely just a delay tactic, it has cooled fears of an Iranian closure of the Strait of Hormuz oil transit point in the Persian Gulf.

Also, the euro has come under renewed pressure as the Greek bailout situation reaches a critical new stage. Moreover, the dollar's recent weakness was driven by monetary debasement fears, with the Fed apparently ignoring its new inflation target by promising to keep interest rates lower for longer through 2014 (and teasing a third round of quantitative easing) even though consumer price inflation is running at an uncomfortable 3%.

Now attention turns to the European Central Bank's debasement of the euro with an upcoming auction of ultra-cheap three-year money expected to total more than €1 trillion.

Finally and most importantly, energy demand is dropping. It's simple supply and demand that prices should drop as well. Standard Chartered analysts are looking for "significant downward pressure" on oil demand over the near term because of cyclical and secular factors.

For the cyclical, it's about the recent International Energy Agency report showing oil demand dropping 0.3 million barrels per day, the first decline since the recession was ending in the third quarter of 2009. Even China's demand was flat year over year. The fact that Europe is likely in the midst of a new recession should keep a lid on energy consumption. Greek oil demand dropped nearly 9% in 2011.

And for the secular, consumers are simply becoming less energy intensive. This is borne out in this week's U.S. Energy Information Administration report. Total petroleum produce supplied to the domestic market was down 4.2% in the week ended Jan. 20 compared with the same period in 2011 and was 13% below the levels seen in the midst of the recession in early 2009. Gasoline demand was particularly weak, down 6.4% from last year and 10% from 2009.

How long should crude be on the down slope? My guess is until the Fed shoves the dollar lower by announcing QE3 at its March or April meeting.

For now, I'm adding the ProShares UltraShort Crude Oil (SCO) to the Edge Letter Sample Portfolio to take advantage of the pullback.

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The author can be contacted at anthony@edgeletter.c​​om and followed on Twitter at @EdgeLetter. You can view his current stock picks here. Feel free to comment below.