As Americans are discovering, when crude oil prices jump, gasoline prices can leap even more, pulling their payroll tax cuts out of their wallets and into their gas tanks. Oil prices are over $100 per barrel, and prices for a gallon of gasoline in Hawaii, California and Arkansas are well past $4.00. Other states are not far behind.
But though Iran, in a tussle with Europe over economic sanctions aimed at its suspected drive for atomic weapons, is a convenient scapegoat, the heart of the problem lies closer to home, with our own energy policy.
The Obama administration claims to want to make the United States less dependent on imported foreign oil, and we have moved a little in that direction. Domestic crude oil production averaged 8,184 thousand barrels per day for the month of November 2011, up from 6,895 thousand barrels per day average in 2005. But we could do better.
On January 20, 2009, when Mr. Obama was inaugurated, the average price of gasoline was $1.84 per gallon and the price of oil was about $39 for a 42-gallon barrel. Now, at press time, refiners must pay about $107 for a barrel of crude oil and the average price of gasoline is $3.28 per gallon. Some are predicting gasoline prices above $5 per gallon.
Gasoline prices are directly related to the price of oil. The White House, preoccupied with keeping environmentalists happy before the November elections, is failing to secure an adequate supply of oil that our refiners can make into gasoline.