“A good rule of thumb is that if politicians are talking about the price of gas, they’re talking nonsense. This week is no exception.”-Matthew Yglesias, Slate Magazine

Gas prices are on the move in the wrong direction. Again. Here in North Carolina, the highest price I’ve seen is $3.75, but I’ve heard it’s gone up to $5.09 in Los Angeles. Ludicrous.

And of course, the price of oil is once again part of a major debate between politicians on Capitol Hill, who seem to always want to point fingers. Republicans blame President Obama and his tax and environmental policies for rising prices at the pump, while Obama blames tensions with Iran, and increasing demand from China, India, and other emerging economies.

According to Timothy Gardner, author of Diminishing Resources: Oil, this should not have been a surprise to politicians. He wrote, “Americans began to wonder what life after cheap oil looked like when rising global demand helped push oil prices to $147 per barrel in the summer of 2008, contributing to the worst economic crisis since the Great Depression. Drivers balked at the high prices and cut down on driving, which helped knock more than $100 a barrel off oil. But once the economy improves, analysts expect oil prices to head up.” They were right.

Fadel Gheit, senior energy analyst at Oppenheimer and Co., told NPR that the recent price increases can also be traced to the fact that the U.S. has shut down several oil refineries in the past three months.

The supply of gasoline has been declining. We have 700,000 barrels of refining capacity [that were shut down] in the last three months,” Gheit said. “That is almost 5 percent of U.S. gasoline production … now offline…. Because the global market is much more lucrative than the domestic market, for the first time in our history we are not importing gasoline. Not only are we not importing gasoline, we’re actually a net exporter of gasoline.”

Gardner, who writes about oil for Reuters news service, wrote in Diminishing Resources that Modern America was built on a supply of cheap oil.” It’s not cheap anymore. Now we have to pay the piper.

Adrianne Loggins
Associate Editor

For more information about oil in the U.S., check out Timothy Gardner’s Diminishing Resources: Oil (ISBN 9781599351179)

Published in: on February 24, 2012 at 1:59 pm  Leave a Comment  
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