Gas Prices

Gas prices started to rise toward the end of January and on February 18, 2012 we heard that they went up because oil refineries reduced production. On this same day we heard firefighters had to douse a fire at Washington’s largest oil refinery. On February 21 we heard because gas prices are at the highest they’ve ever been at this time of year that the Republicans are running with the increased gas prices and touting that it’s because of Obama’s failure to release fuel from the federal petroleum reserve and implement the Keystone pipeline. I’m going to address these 2 issues.

I’ve noticed that every spring we have oil refineries, usually in the south, that have fires thus reducing supply when the demand is high – this drives up the price of gas to consumers. It appears with the Washington fire that this process will start earlier this year and I’d bank on it being because it’s an election year and since Republicans are backed by the oil tycoons they’ll do whatever they can do to help out their cohorts and continue to get the tax credits they’ve been getting for years even though they make billions of dollars annually (don’t forget they don’t like the new smog rules). As far as releasing oil from the reserves - last year when about 30 million gallons of gas were released from the federal petroleum reserve gas only went down about 10 cents per gallon so that wouldn’t help much when you consider how much they’ve jumped in a month. But, experts are saying for every 10 cent rise in the price of gas the economy losses $11 billion a year – hmm – maybe this is a political ploy.

The pipeline issue is foolish. If we started today the oil wouldn’t be available for years so it obviously is not a factor in rising gas prices this year. Yes, there are tensions with Iran and we get 10% of our oil from there but remember that in December 2011 we once again began issuing permits to drill in the Gulf of Mexico and in January the President directed his administration to open up more than 75% of our potential offshore oil resources. These measures would work for the short term and we were reminded that we have only 2% of the world’s oil resources so we need a strategy that develops every available source of American energy in order to reduce our dependency on other countries.

On February 22 Gingrich said if you like $2.50 a gallon (of gas) we want you to be with us (Republicans). I looked at gas prices online and found that gas prices haven’t been this low since mid 2004 and they’ve been on the rise ever since. They only way to return to those prices would be for Wall Street speculators and oil companies to reduce their profits which we know they won’t do.

Per Sageworks of the $50 you spend at the gas pump $30.75 (61.5%) goes to the oil company, $7 (14%) to the refinery, $6 (12%) to taxes, $4 (8%) for delivery, $1.25 (2.5%) goes to the credit card company and $1 (2%) to the gas station. On February 23 the Commissioner of the US Commodity Futures Trading Commission said big banks gambling on oil drives the price of oil up, excessive speculation pays Wall Street speculators 22% (this means if a barrel of gas is going for $80 it shoots up to $98 , if it’s $100 a barrel it goes to $122) before it’s sold to be made into gas, the Commission is trying to place limits due to speculation markup and Wall Street is suing them in order to keep things status quo. Now think about it – what political party is backed by Wall Street.

Manipulation in supply and demand by the banks, Wall Street, the oil companies and refineries are the reason for the increase in gas prices but they want you to believe it’s because of the tensions in Iran and the other parts of the Middle East.

On February 24 it’s reported that you can get gas for $2.95 per gallon in Colorado and the price in California is up to $5.12 per gallon; gas thefts are on the rise due to the increase in price.