The price of gas

Jay sends an email with pictures of the price of gasoline compared to Bush approval and the cost of oil vs. the price of gasoline. Note the divergence in the latter this year.

According to the email Jay sent, the graph indicates that we should be paying about $2.60 a gallon for gasoline at the pumps if the price of gas were keeping pace with the price of crude. The most I have paid recently is $1.92.

It reminds me that a few months back, when the threat of oil price increase had reports saying Bush was in secret deals with the Saudis to increase the supply of oil to boost his ratings, the Saudis said that we Americans are fools enough to believe anything, when in fact, it's not the supply of oil that is causing the price increase at the gas pumps, but the lack of infrastructure for processing the oil.

This expert says one thing and that expert says another. I certainly can't make an educated assumption about the worldwide availability of oil. I can, however, make what I think is an accurate assumption about the availability of oil products. You will pay the optimum price that can be garnered by any means the oil corporations choose to exact their profits. Notice I didn't say maximum price. The optimum price includes considerations like who do they want as president, and what other factors will be in their best interests in the short and long run. Bush, the deregulator, pro-big business, oil-invested president will be certain to make oil company interests America's interests (of course, I think Kerry can be counted on to do the same, but he may not be as reliable as George who has personal family fortunes invested in oil). And Bush's approval is tied to gasoline prices. Ergo, gasoline prices will not spike with oil prices until at least after the election.

Economist Jude Wanninski offers an explanation, some of which I understand, while insisting that there is not a shortage of oil in the world - just a shortage of infrastructure to process the oil (as the Saudis declared), outlining the reason for that lack (it wasn't profitable for the oil companies to invest in processing infrastructure when the price of oil went down), and concludes:

Why is the price of oil so high? It is because the US dollar is floating, free of gold or any commodity anchor. As long as it is, the entire world will be forced to somehow accommodate this wholly unnecessary volatility in energy supply and price.

It may be unnecessary, but you can count on it as long as there is big profit for private enterprise in it.