Energy secretary says gasoline prices vexing

[jmcgowanjm]

the U.S. Energy Information Administration said there
was a "good possibility" retail gasoline prices will set a
new high in March. The national average for unleaded is
$1.72 per gallon, just 3 cents shy of the record set in late
August, according to the agency, the Energy Department's statistical arm.

Tight global supplies of crude oil, a recovering economy
and the looming summer driving season mean that
gasoline prices are certain to climb, agency analysts say.


http://www.chron.com/cs/CDA/ssistory.mpl/business/energy/2434191

Start watching Brazil, China and India.

It's US vs Them on available oil supplies.

[AndyP]

1. Didn't shurb have a plan for this

If I remember correctly didn't he say something about better fuel economy cars and electric hybrid cars in one of his first two state of the union addresses? Looks like he's living up to his promises.

[Odallas]

2. Tight supplies may be partly to blame

but spiking energy costs in an election cycle need to be examined more closely. Recall that this occurred in 2000 with gasoline prices reaching record highs that summer and California experienced an energy "crisis" that caused the state to become bankrupt. In my opinion, energy corporations are manipulating supplies and costs to have influence on the election and are attempting to "push" energy dependent voters toward a president that represents the possibility of plentiful and inexpensive fuel.

[NNadir]

3. I think that they can manipulate prices only so far.

The fact is that if the oil supply is growing smaller - and there is evidence that there is - and the demand is going up, prices will rise. They can only flood the market to a certain extent.

The California strategy, used so effectively against Gray Davis, of withholding supplies to create an illusion of exigency is a mixed bag for them now. First, the manipulation has been shown and proved. Second, they have just spent close to $200 billion dollars on an oil theft, with no real benefits accrued. They are closely allied with the oil industry and, if you are old enough to remember the 1970's oil crunch, the industry was poorly viewed on charges of "gouging." (Oil hit the incredibly high price of $1.00 a gallon. They had to install new meters on all the pumps to include the next digit.)

[hatrack]

4. Our own demand grew 3.3% in December alone

According to DOE, imports in 2003 made up 63% of all oil used in the United States - compared to 28% at the time of the Yom Kippur War and the first oil shock.

China has now surpassed Japan as the world's #2 consumer of oil & gas, and with 9% economic growth driving demand there, supplies are going to remain tight until even more substantial price spikes eventually change the demand picture.

[brokensymmetry]

5. They'll get more vexing.

The dollar is down, and likely to go lower. Oil is becoming more scarce. Why, then, should OPEC not raise their prices - at least in terms of the dollar?

We had best rig for stormy weather. Methinks we're sailing into the teeth of a typhoon!