Part 1: Oil in demand as a world commodity/U.S. in competition
As a prelude to writing about escalating gas prices, might I ask Patch readers what might appear to some as a few inconsequential, insignificant, meaningless, silly, and totally worthless questions?
Can you think of a country whose politicians insist on having very expensive custom, low miles per gallon, bulletproof limousines and suburbans, the finest jets, the finest food and champagne and wine and drink, live in opulent homes and townhouses, etc..., while preaching to their citizens they need to cut back, live smaller, walk more, and will love driving teeny, weenie tin can-like cars.
As illuminated by physics, what happens to the energy when a full size vehicle hits a teeny, weenie vehicle and what happens to the occupants in a crash of a teeny, weenie vehicle with a full size vehicle?
Do you think that by the EPA road-blocking off-shore petroleum drilling, coal mining, nuclear reactors, shale oil production, etc..., the price of all fuels might rise, and lowly citizens will be cutting back, living smaller, walking more, love driving teeny, weenie vehicles, as they waive to the politician limousines as they speed by?
Woe to consumers and “Heaven Help Us!” if gas prices do hit $4.60 by May in Chicago as experts predict. Regular unleaded gas now averages $3.48 a gallon, vs. $3.12 a year ago and $2.67 in February of 2010.
The trend in gasoline prices nationwide over the last three years has not been a friend to the consumer. Tracked during a three-year period, gas prices have jumped 102 percent.
January 2009 ($1.65) January 2010 ($2.57)
January 2011 ($3.04) January 2012 ($3.29)
It is good-bye to the days when gas was $1.40 a gallon, as it was when George W. Bush took office in 2001. By the time Bush left office in 2009, gas was up to $1.68 a gallon, a 20 percent increase (Gas was 18 cents a gallon back when I started driving in 1960.).
It should be evident why gas prices have spiked up so dramatically from the time Obama took office in 2008 until now, with further predictions that gas prices will rise even higher by summer?
Since taking office three years ago, President Obama has demonized the oil industry, dramatically slowed offshore drilling, blocked ANWR and killed the Keystone Pipeline.
How much higher must a gallon of gasoline go before the American people start to fault President Obama! Already the American people are feeling a squeeze on their available incomes with many limiting unnecessary driving. Unfortunately, when gas prices increase the cost of food and most other products to up. http://articles.latimes.com/2012/feb/14/business/la-fi-gas-prices-20120214
Those who compare the cost of gasoline here in the U.S. to the price in Europe are quick to say that the American people should consider gasoline a bargain at $4 a gallon, that this is the new norm, and that we must get used to it.
Not widely reported is that the U.S. is awash in the gasoline it refines, even exporting a record amount of it. If this is so, why are gas prices so high and predicted to go even higher?
Oil companies have gotten a bad rap. Time after time, the American people are being told that oil companies are making astronomical profits. Bill O'Reiley of Fox TV News takes every possible opportunity to bash big oil companies, insisting that they are greedy and responsible for escalating gasoline prices.
Actually, profit margins of U.S. oil and gas companies average 6.7 cents per sales dollar. This is below the average profit margin of 9.2 cents per sales dollar for all other manufacturing industries. Pharmaceuticals and Medicines average over a 23-cent profit per dollar of sale. http://www.conocophillips.com/EN/about/energy/energyissues/pages/profits.aspx
Many Americans do not realize that oil is a commodity on the world stage, and that the U.S. is in competition with other countries for oil. Accordingly, the growing world-wide demand for oil and gasoline to fuel the economic expansion of China and India must factor into the rise of gasoline prices, in addition to high gas taxes, civil unrest in Venezuela, continued unrest in the Middle East, political instability in Nigeria, and too few U.S. refineries.
To further destabilize the oil market, on Feb. 19, in retaliation for the sanctions placed on Iran by the EU, Iran cut off the supply of oil to England and France. http://www.huffingtonpost.com/2012/02/19/iran-oil-ministry-exports_n_1287415.html
As explained recently by Mark Levin, a weekday syndicated talk show host on WLS-AM, gas pricing is dependent on supply and demand. It should not be the role of government to intervene.
The U.S. is benefiting financially from exporting much of the oil it refines up and above what it needs.
The problem: Despite a 10 percent drop in the use of heating oil due to a warmer winter, and less driving by many, not enough oil was left here at home for domestic use.
The result: The oil that is here has become pricier.
The gasoline price spike can also be tied to the printing of billions of dollars by our government, a process that devalues the dollars so it takes more dollars to buy a gallon of gasoline.
Part 2: Restricted drilling/Environmental and energy policies drive up price of oil.