Gas Skyrockets 

Gas Skyrockets

I guess gas in some areas in the country is over 3$ a gallon. Here unleaded regular is hovering between 2.39$ and 2.49$ but I expect that it will go up, perhaps even today. A few things to wonder about: The 66$ a barrel for oil is in the futures market. What are the oil companies actually paying for oil today? Exxon reported huge profits last quarter and a large reason for that has to be the difference between what they are paying for the oil and what gas is being sold for. For some reason the price of gas is pegged to the futures market instead of the real cost. This is a huge windfall for the oil companies. I am not one of these big business haters but the oil companies have always bugged me. When the price of oil goes up gas rises immediately, when it goes down the decrease comes slowly. One time they tell you “well, we have to pay the higher prices to replace the gas being used today so that is why prices go up right away” but then they tell you “well, we have already paid for the gas in the pump so we have to charge based on that”. They get you coming and going.

Nationally we need to change some things. First, part of the problem is refining capacity. It has been a couple decades since new refineries have been built yet our demand continues to increase. There needs to be more refineries. Make the approval process easier. Begin drilling in the Artic Reserve. That should be a no brainer yet the caribou worshippers have managed to keep it from happening. You can have both oil and caribou. There are also plenty of places of the US coast where environmentalists have stopped oil development. Those reserves need to be tapped. Different parts of the country have different legislated gasoline additive requirements which increases the cost of refining and decreases distribution efficiency. Is all that really necessary? The increased availability and practicality of hybrid cars is a good thing but they are still to pricey for most people. Perhaps tax credits for consumers that purchase them would be a good incentive.

It is amazing the economy is doing as well as it is under these conditions but eventually there has to be an impact.