And The Beat Goes On...

Gas prices are on the rise again.  It has almost become an annual event, like the swallows returning to Capistrano, and almost as mysterious.

The market is awash in oil.  There is so much oil being produced that - in a normal "supply & demand" model, we should be paying half of what we are for gasoline.  Demand for the most part is down, as weak economies struggle to gain a firm footing, and overall consumer consumption is down.  So tell us again...why has the price of regular fuel in Chicago increased by $.36 since the beginning of February, and what condition would cause the price of gasoline to be $.31 higher than it was at the same time last year?

The simple answer is speculation, the process of "betting" on certain conditions or situations that will have a negative (or positive - depending on whose side you're on) effect on the supply of oil.  But nothing is ever simple, and it may be that the more complex answer is the failure of the government to put limitations on those speculators.

There is an interesting article dealing with this subject (http://www.mcclatchydc.com/2011/05/25/114759/wikileaks-saudis-often-warned.html#storylink=cpy#storylink=cpy) that sheds some light on the effects of speculation, as well as how speculators are allowed to continue operating without regulation.  This is not a new condition, nor is it the fault of a particular party or administration.  It is just something we as Americans have gotten used to.  It has literally become white noise to us, and there is little the average American can do to make an impact, since as we said earlier...reducing demand doesn't seem to make a difference.