Why The Price of Oil is High In The US

I've heard a number of very uninformed people insisting this is a supply and demand issue and saying that if we open ANWR, get OPEC to pump more, or drill off shore where it is currently banned we can fix the issue and that's just NOT true. Crude oil supplies are at 8 year highs and demand is average for this time of year.

http://www.msnbc.msn.com/id/12280570/from/RL.3/

The problem has many causes but the monetary policy, refined supply and gouging are the main causes.

The monetary policy of the Bush administration has more to do with the high price of gas and oil than anything else. In other words the value of a dollar is the main cause of high gas and oil prices. Record defecits lead to inflation, lower currency valuations, and higher commodity prices.

Oil prices in dollars rose by 162 percent from their low point in January 2002, they climbed by less than half that rate measured in euros, 77 percent. At that rate, oil prices would have only risen to $34 per barrel in October 2004, instead of the actual $52, without changes in the dollar’s value.

A picture, as they say, is worth a thousand words.

http://finance.yahoo.com/q/bc?s=USDEUR=X&t=5y

As far as refined supply goes, you can pump your brains out but if you don't have the capacity to refine it, pumping more oil is meaningless. If that piece of garbage, corporate welfare, Energy Bill had fixed the refinery BOTTLENECK then this would be a short term problem. Since the GOP decided to take 4 years to create energy legislation that did NOTHING to fix the issue but instead gave energy companies HUGE tax breaks at a time they're making record profits NOTHING got done to fix the bottleneck in refining. A bunch of oil guys did get even richer though.

Anyone who voted for that piece of shit legislation should be voted out of office. Here are their names....

http://realityofitall.blogspot.com/2005/10/corporate-welfare-energy-bill-see-who.html

And yes, the oil companies are price gouging. You'd have to be pretty naive or awful foolish to believe otherwise.

i.e.
Valero Energy Net Profit 2003 = $617 MILLION
Valero Energy Net Profit 2005 = $3.6 BILLION

Exxon Mobil Net Profit 2003 = $21.5 BILLION
Exxon Mobil Net Profit 2005 = $36.1 BILLION

"When speaking to lawmakers and the general public, the oil industry highlights the small profit margins (typically around 8 to 10 percent) that are measured by comparing profits with total revenues. But when oil companies communicate with Wall Street and shareholders, they use a different measurement."

"For example, ExxonMobil's annual report states: 'ExxonMobil believes that return on average capital employed is the most relevant metric for measuring financial performance in a capital-intensive industry' such as petroleum. In 2004, ExxonMobil's global return on average capital employed was 24 percent; its U.S. profit margin for oil drilling was 37 percent and the company's American refining sector enjoyed a 29 percent profit margin. This shows that the company's biggest profits came in the American market, and provides sound footing to implement a windfall profits tax."

http://www.accuracy.org/newsrelease.php?articleId=1214

More demand in the last few years from China and India, oil speculation and of course the matter of a little war in Iraq destabalizing the middle east are some other more minor contributors to high oil and gas prices.