published Wednesday, March 9th, 2011

How high will our gas prices go?

We all know about the law of supply and demand. When anything people want is much in demand, prices tend to rise, at least until there is a greater supply.

Well, as American motorists are demanding more gasoline supply, with spring and summer driving at hand, gas prices are rising.

But one other big price factor is trouble in the North African country of Libya, which is essentially in a state of civil war.

Libyan oil is refined to supply Europe a good bit of its gasoline. But as Libya’s oil flow is disrupted by strife, that reduces supply and raises prices in Europe. That indirectly affects prices — and thus consumers — in the United States and throughout the world.

The cost of gas in the United States has risen by nearly a dollar a gallon from one year ago. The wholesale price of gas has jumped 38 cents just since Libya’s violence began in mid-February.

We produce much oil and gasoline in the United States, but we put much of our oil off limits, too. So, we remain heavily dependent on foreign oil, and disruptions “there” raise prices “here.”

Now we are being painfully reminded again, as we fill up our tanks and watch the price meters rise.

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nucanuck said...

Conventional oil supply/production has not increased for four years while worldwide demand continues to grow. Synthetic crude,ethanol,and natural gas have filled the gap so far,but as the demand curve continues to rise and as conventional oil enters the bell curve downslope,we are entering a whole new paradigm...not one we would choose.

We are going on a petroleum diet. We can individually plan for it,or we can suffer with it,but it is a certainty.

March 9, 2011 at 10:50 a.m.
Libertine said...

It was skyrocketing gas prices in 2008 that was the first (and a big) domino in the chain of disasters that became the Great Recession. This could easily drag us right back down.

March 9, 2011 at 7:08 p.m.
rick1 said...

Obama said: "Under my plan of cap and trade plan makes electricity rates will necessarily skyrocket"'; "coal powered plants, natural gas, you name it..whatever the plants were...they will have to retrofit their operations,that will cost money and they will have to pass those costs onto consumers"

So, if somebody wants to build a coal plant, they can - it's just that it will bankrupt them, because they are going to be charged a huge sum for all that greenhouse gas that's being emitted.

Interior Secretary Ken Salazar stated in 2008 that he was opposed to opening up off-shore areas to new oil and gas drilling even if the price per gallon of gasoline hit $10 per gallon.

Secretary of Energy Stephen Chu, in 2008 called for gasoline to cost $8 per galllon to push it up to European levels.

Don't expect this administration to do anything to bring down the cost of oil, and this will crush our economy even more.

Don't forget Obama also said in 2008 that we should have a windfall profit tax on the oil companies when the cost of oil goes over $80.00 a barrel. Where are you Mr. President? Every day it becomes more apparent that you are all talk and no action.

March 9, 2011 at 8:20 p.m.
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