The conflict in the Middle East has prompted a surge in gasoline prices across the US. Despite the rise, gas prices are still down $1.44 cents from this time last year, when a gallon of regular cost $3.00. So much of it depends on if you think the glass is half full…or half empty.

I’ve always been one to believe that the glass is half full. As long as gas prices stay low enough that everyday Americans can afford the cost to get to work and back, it’s a good thing.

It will be interesting to see how the conflict in the Middle East turns out and how the transitional of power here in the US effects gasoline prices moving forward into the spring and summer of this year.

NozzleRage.com recently put out their second video to bring awareness to how much money we send to foreign nations, how it can effect our economy, and to promote alternative fuels for our vehicles. Even though I don’t think that this video is as funny as the first one, I like how they’re pushing our independence of foreign oil through humor that we all can relate to and what we can do about it.

We’ve seen the price of oil drop more than $10 over the last two days.

President Bush

On Monday, Bush lifted the legislative ban on offshore drilling when he gave his speech on the White House lawn. Now it will be up to Congress to approve lifting the ban before anything can happen.

But the move, by itself, will do nothing unless Congress acts as well to lift its own drilling ban. There are two prohibitions on offshore drilling, one imposed by Congress and another by executive order signed by the first President Bush in 1990.

This may or may not happen in Congress, but it will put more presser on them to do something in regards to energy.

Ben Bernanke

Also on Monday, Federal Reserve Chairman Ben S. Bernanke said that slowing growth and inflation have risen.

Yesterday’s 4.4 percent drop in New York crude oil futures was the largest since March, as Federal Reserve Chairman Ben S. Bernanke said that risks to U.S. economic expansion and inflation have risen.

“The enormous jumps in oil prices and other commodity prices are, to some extent, due to real factors out of the control of the Federal Reserve,” Bernanke said before the House Financial Services Committee today. “The Federal Reserve cannot create another barrel of oil, it’s the global supply and demand.”

Unexpected Supply Increase

Yesterday, reports came out that there was more oil than expected in inventories:

Crude oil futures fell more than $4 a barrel in New York after a surprise increase in U.S. inventories and as a slowing U.S. economy sapped demand for energy.

Even though the prices at the pump hasn’t changed, it’s amazing what big news this is. This is another reason why we need to be developing alternative energy sources so we’re not so dependent on a commodity produced by foreign nations.

A barrel of oil closed at $134.60 on Wednesday.

Gas prices in the US have been relatively cheap for a long time. There are many other places around the world that have been paying over $4 a gallon for gas for many years. Now that the US has reached an average of over $4 a gallon, here are some gas prices from around the world. For the country’s that use the metric system, the prices have been converted relatively from liters to gallons.

The main factor in price disparities between countries is government policy, many European nations tax gasoline heavily, with taxes making up as much as 75 percent of the cost of a gallon of gasoline.

Gas Prices Around The World

Highest gas prices

Eritrea – $9.58
Norway – $8.73
United Kingdom – $8.38
Netherlands – $8.37
Monaco – $8.31
Iceland – $8.28
Belgium – $8.22
France – $8.07
Germany – $7.86
Portugal – $7.84

In many oil producing nations the government owns the oil companies and keeps prices low to benefit their citizens.

Lowest gas prices

Venezuela – 12 cents
Iran – 40 cents
Saudi Arabia – 45 cents
Libya – 50 cents
Swaziland – 54 cents
Qatar – 73 cents
Bahrain – 81 cents
Egypt – 89 cents
Kuwait – 90 cents
Seychelles – 98 cents

Source

OPEC blames supply and demand, the government blames speculators, and consumers blame the government. Around and around we go in a circle, never getting a definite answer from anyone. I blame all three, and here’s why:

India and China have risen to become oil guzzling nations. We were able to recognize this over three years ago, that they would continue to consume oil and increase demand worldwide. The China and India economies have grown year over year since then, and with the globalization of manufacturing the trend will only continue upwards in the future.

Charles Perry, president of Perry Management:

Record prices come as no surprise with worldwide depletions of low-cost oil supplies, a large migration of investment capital from equities to commodities, a drop in the value of the dollar and booming economies in places like India and China, Perry said.

The US is based on capitalism and free enterprise. It’s no wonder that oil speculators are leveraging oil futures to make a profit. As long as they’re not doing anything illegal, then they have the perfect right hedge their bets. If there was a surplus of oil, those same speculators would be on the wrong side of the bet and lose. They’re taking a caculated risk with their money. This is why I believe if we started drilling offshore or in ANWR, we would see a lot of these speculators exit their long positions and we would see oil prices drop. However, the US government is going to look more closely at what the speculators are doing to see if they are doing anything wrong. Mike Connors, Albany County’s comptroller, says:

We should be angry with the people artificially driving up the prices on the open market — speculators who he says are breaking the law.

But on the flip side, some people don’t want to blame the oil speculators because it’s all about supply and demand.

Walter Lukken, theacting chairman of the Commodity Futures Trading Commission, says:

If you want to boost the price of anything – oil, wheat or baseball trading cards – you have to keep it off the market. You can shove the trading cards under the bed, you can hold your wheat in any of countless grain elevators, you can store the oil at somebody’s tank farm. But there’s no sign of more oil going into storage; available figures on the amount held in inventory have barely budged.

The government is not doing enough for alternative energy. It would be too easy just to blame the current president that there’s not enough being done in alternative energy. We have to look at all the presidents, Congress, and the Senate since the 1970s when oil prices roughly tripled before falling back down in the 1980’s. I have to laugh when people just try to blame George W. Bush. The list of presidents to blame also include Bill Clinton, George H.W. Bush, Ronald Reagan, Jimmy Carter, Gerald Ford, and Richard Nixon. Government just has not been proactive enough for the last 40 years in providing a reliable and cheap form of alternative energy to fuel our vehicles and provide electricity for our homes. This is just another example of America’s dependence on oil.

The tipping point is just about here.

I will say it again, in today’s world it’s corporations and private companies, not government, that drive many big social changes. These corporations and private companies will be the ones to solve the energy crisis that we face today. And for that, I am thankful.

An oil speculator dies and goes to heaven. St.Peter meets him and the gate and tells him he can’t get in because there are already too many oil men in heaven.

The speculator pleads with him and begs for 2 minutes in heaven to make room for him. St.Peter laughs and says he’ll never talk anyone out of leaving heaven…so go ahead and try.

A minute later thousands of oil guys are rushing to get past St.Peter and push him out of the way.

What in the hell did you do? Asks St.Peter?

Oil guy says, simple, told them there was a big oil find in hell.

That’s terrible, exclaimed Pete. But a deal is a deal, you can stay.

No thanks, I’m off to hell, with all that interest there must be some truth to the rumor.

People are changing the way they do everything to so they can save at the pump. Conservation, car pooling, taking public transport, and riding their bike are all different ways that people are changing in their daily lives.

It’s been quite some time that one singe thing has changed society. Not only in the US, but around the world.

Oil hit a new high of $142.99 yesterday on the New York Mercantile Exchange and OPEC President Chakib Khelil predicted that the price of oil will climb to $170 a barrel before the end of the year because of the falling dollar. This is not an optimistic outlook on the near term future for energy. However, I do have some optimistic outlooks.

As people feel pain at the pump, engineers and entrepreneurs are figuring out ways to provide a cheap, low-cost, efficient alternative to gas guzzling vehicles and how to develop an alternative energy source for homes and businesses.

I’ve already mentioned the Progressive Auto X Prize competition that has a $10 million dollar award for the company that develops and produces a vehicle that can achieve 100 mpg and have a marketability to sell to consumers. The X Prize Foundation is also planning other contests for energy and environment that will make big impacts on the world.

Over the last year as oil prices have risen, I have seen more and more solutions from different companies and individuals. New innovations are coming more quickly and will push forward to the market faster as oil prices rise. I feel like we are on the tipping point and something huge is about to happen. The world as we know it is about to change, and it’s going to be for the better. Once the price of oil has hit a price where consumers can no longer take it, they will break…and that is when the alternative energy revolution will begin.

Just last week, I mentioned that speculators were causing an increase in the oil prices. Yesterday, Saudi Arabia said they would increase production of oil by 200,000 barrels of oil per day. But even with that increase, many don’t believe that it will effect gas prices. The Saudi’s told us that speculators and the falling U.S. dollar are causing high oil prices.

They’re going to have hearings this week on this issue:

The question of whether speculators are influencing prices is expected to get closer scrutiny this week in Washington, where a Senate committee led by Senator Joseph I. Lieberman, the Connecticut independent and former Democrat who supports Mr. McCain, will hold hearings on the price swings in the crude oil market.

It will be interesting to see who’s required to come to these hearings. But others don’t think speculators are to blame, just simple economics of supply and demand:

But Mr. Brown pointed to fundamental economics and “oil demand rising faster than supply.” The American energy secretary, Samuel W. Bodman, put it more bluntly in a meeting with reporters, saying, “There is no evidence we can find that speculators are driving futures prices.”

I believe it’s a combination of both higher demand and speculators. The higher demand is exactly the reason why the speculators are pushing the price up. They want to make money, and are taking full advantage of our dependency on oil! I am not against capitalism or taking advantage of an opportunity, that is why we need a solution that will force the speculators exit their positions.

So, until we start drilling more at home, the U.S. will continue to be at the mercy of foreign nations. If we can solve the oil crisis and bring prices down, I believe the economy and the U.S. dollar will begin to recover as well.