Current gas prices are not the result of supply and demand.

It’s a common mis-conception.  US refineries have near record high stocks of gasoline.  The reason for the outrageous cost at the pump these days is a result of speculation by energy traders on futures.  Put simply, the major refinery owners are selling you gas at current prices based upon what they predict it will cost them to manufacture and replace that gasoline in the future.  It’s a mechanism to insure specific levels of profitability to investors.

So what if the prediction is wrong and the price of oil once again drops below $100 a barrel?  Then the current price elevation will go toward to the now annual record “windfall” profits of the petrol industry producers.  Trust in this: Exxon and the other gasoline manufacturers are going to make money or they are going to make more money.  They’re not gambling one micro percentage point of their projected revenue stream or profit levels.

This is not an overly difficult concept to understand but it does take a little thought.  Therefore it will continue to be sold as a supply and demand driven cost increase to the consumer.  The reality is that the refineries have plenty of gas and absolutely no chance of running out any time soon.  What you’re paying at the pump is insurance.  Insurance that big oil investors are not gambling a single dime as the cost of oil increases.  For all the nay-sayers I’m providing a link to the US Engery Administration website that details, in more complex form, exactly what I have stated here:

http://www.eia.doe.gov/pub/oil_gas/petroleum/feature_articles/2008/spgmogas2008/spgmogas2008.html