Here is a great article concerning the price of gas and why it is going up. It also let's you know if the US energy policy is effecting it. And take a wild guess if it is.
Domestic oil important in price equation
THE ISSUE: Gas prices; OUR OPINION: Big oil may not be the answer but companies are crucial in lowering pricesCartoonists and comedians can make rising gas prices seem humorous, but there is nothing funny about going to the pumps these days. Just when the economy shows some signs of improving, the stark reality is that gasoline price increases stand to put the brakes on consumer spending that could further the recovery.
The numbers show that Americans are earning and spending more but a lot of the extra money - including dollars from a cut in Social Security taxes - is going down their gas tanks. And that spending does little to help the economy. People can't by other goods and services when they are spending so much to drive.
Dan Kish, senior vice president for policy at the Institute for Energy Research, says it is important that people remember why gas prices are high and where anger should be directed. "In order to effectively push costs down, I intend to clear up some myths about why gas prices are high," Kish writes.
Myth No. 1: U.S. energy policies are not causing high gas prices.
Ramping up U.S. energy production by giving companies access to more than a meager 2.4 percent of our outer continental shelf could significantly add to domestic supply, steadying and reducing the effects of foreign influence on prices, Kish says. In fact, a recent analysis conducted by the Congressional Research Service found the United States has the most oil of any nation in the world - more even than oil-rich Saudi Arabia - meaning thre is serious potential to stabilize costs.
"Throughout the country, undiscovered but technically recoverable oil is estimated to sit at 145.5 billion barrels, and many believe that to be a conservative figure. Moreover, the United States has 1 trillion barrels of recoverable oil shale, or more than 5 times as much as has been produced in the United States since 1859. Proven reserves amount to about 19.1 billion barrels, and that's the number used by those who say we only have ‘2 percent of the world's oil.' If the nation were to extract a small fraction of these supplies, it would dramatically affect energy security, benefit the economy, send an influx of revenue to cash-strapped government coffers, and help moderate gas prices," Kish writes.
He concludes: "Instead, the Gulf of Mexico has essentially been shut down for a year, with domestic production down by 300,000 barrels a day as a result of the drilling moratorium and permitting freeze. And plans to open up portions of the Atlantic Coast and the Eastern Gulf were scrapped last December. While the government should be taking steps to tap our oil supplies, current U.S. policies are locking them off."
Myth No. 2: U.S. gas prices are not affected by foreign countries.
U.S. gas prices are set on the global energy market. Every country that uses or produces oil around the globe has an effect on prices. When demand is higher than supply because it's a typical high-driving season - like the summer - or unexpected low production from certain countries because of bad weather, civilian upheaval, or a government issued moratorium, prices go up, Kish says.
Even the expectation of reduced supply can cause significant price increases. For example, worries of closure to the Suez Canal - which runs along Egypt's coast - threatened the transport of oil, which immediately raised fuel costs, as has the threat to Libya's moderate production capacity.
Inversely, when demand decreases compared to the amount of oil produced worldwide, it tends to lower gas prices. "We can compare this to groceries; when corn on the cob is in season it is easy to come by and cheap to purchase. But were you to look for it in March, prices can be pretty steep," Kish says.
Myth No. 3: Oil companies are responsible for high gas prices.
"Domestic oil and gas companies would love nothing more than to find, extract, and produce more oil and natural gas for the country, which would bring prices under control. These companies are competing internationally for oil resources, but competition is stiff. Despite their seemingly large size, U.S. companies are not even among the top 15 biggest oil companies worldwide, dwarfed by the state-owned firms in China, Russia and Venezuela. Having more access to our existing domestic oil supply would be beneficial to our entire economy," Kish writes.
OK, Kish shares the perspective of these oil companies. But before opponents tell Kish to kiss off, consider that he does not advocate simply turning over energy policy to big oil.
"There is no one solution to high fuel prices, but increasing domestic production through smart energy policies that stabilize the international oil supply is a pretty good start."
On that, we agree.
Let's get busy and drill baby drill! Now that's the All Right Idea!!