Oil Prices

High gas prices are providing plenty of material for the media. They’re trying to whip everyone in to a panic. And, although GDP has not gone negative for even a single quarter, the media is convinced we’re in a recession. (The definition of a recession is 2 consecutive quarters of negative GDP.)

But, back to gas prices. We shouldn't blame anyone but ourselves. Our rampant consumption of gasoline, plastic products, and other things made from oil, is finally catching up to us.

Combine that with the fact the NIMBYs have prevented any new refineries in this country in over 30 years, and we've become prisoners to the major oil producing countries.

U.S. refineries are running at near 100% capacity, but we've imported 1.2 million barrels of refined gasoline a day so far this month to meet demand. This comprises approx 10% of our daily consumption. Imported refined gasoline costs much more because of transport cost. As imported gasoline increases, overall cost at the pump goes up.

Unless we increase refinery capacity in this country, we don't have a way to deal with increased oil production.

So, when Congress starts talking about expanding where companies can drill, they need to also talk about increasing refinery capacity, or it's all just lip service.

This all said, the answer really is to cut back on consumption. There's just so much of this stuff in the ground, and when it's gone, it's gone.