Foreign Babies Enjoy U.S. Oil, While Domestic Gas Prices Rise!

Young Swede Enjoying US Oil

After nearly touching the $3.00 level a few months back, gas prices here in the U.S. have roared upwards,with fanciful talk of prices hitting an unlikely $5.00 by summer. Of course such talk happened last year as well, so we tend to dismiss it. The chatter is driven by Republicans, who are hoping that some sort of event creates the type of negative impact that could knock President Obama out of office in a way that their own candidates cannot. A rising gas price is a perennial giver of hope to the few who want a new president at any cost. The President has argued for alternatives to oil, and Republicans have argued for the status quo, but more of it. Which makes this article in U.S.A. Today an eye opener.

For the first time since 1949, the United States exported more gasoline, heating oil and diesel fuel last year than it imported, the Energy Department reported today. Bloomberg writes that to offset weak U.S. demand, refiners exported 439,000 barrels a day more than were imported the year before.

(USA Today)

Notice the reference to "weak demand" in the United States. One would think there would be raging hunger pushing prices up, no? Are rising prices weakening demand? Or should weak demand cause prices to fall domestically? At what point do sustained elevated gas prices drop demand, and at what point does that falling demand cause prices to drop? It's all very chicken and egg, with speculators, manipulative refiners/oil companies, and world demand muddying the rationality of the market.

The article also quotes from a 24/7 Wall Street article that states, "The secret to making a profit in refining these days is for refiners to source crude oil domestically and then sell the refined products to US consumers at prices based on imported oil."

If anything, we seriously need some congressional action and study in terms of how domestic pricing is structured, but we can be pretty sure that won't happen soon. Domestic production is at an eight year high, and yet street prices rise in tandem, and Republicans will continue to give aid and comfort to the status quo. Clearly, more oil, is not the solution, when the market is manipulated, complex, and international. But at minimum the prices we pay should reflect the reality of the ample supply.