No End in Sight


Yup, another 20-30 cents tacked onto the price of gas today, and there’s folks saying that it’ll get to $4/gal soon. Here’s the math I don’t understand.

The price of a barrel of oil has essentially remained flat over the last week — sure it’s up or down a dollar or two, but that’s only about 3%, plus or minus.

Over the two days, the price of a gallon of gas has gone from about $2.389 to $2.999, an increase of 61 cents, or about 25%, plus or minus.

How does that make any sense? I understand that because of Katrina refinery capacity is down 10%. Ten percent. Aside from an opportunity to price-gouge, I don’t see any other reason for the gas companies to increase the price so much. You could blame the local folks manning the QuickTrip or the 7-Eleven, but they would tell you that it’s the gas companies dictating price to them.

So where’s the rationale for the gas price hikes? Dunno.

Today, the President says he will loan oil from the strategic oil reserve to refineries needing it, and that this should help lower the price at the pump. If he had any gumption, he’d dictate a national gas price, stick to it through this crisis, and maybe even give the oil companies a nice tax break for being good corporate citizens. He’s an oil man though, and I’m sure the sound of cash jingling in the register is in the background.

If the US economy is so strategic, and the price of gas will slow down any kind of economic recovery — and I believe that $3/gal or more will do that — then it’s in his and our best interest to stake the prices for a while, and let the country try to get a handle on this.

My two cents!