Gasoline is a byproduct of oil refining and the U.S. produces lots of it. The cost of gasoline is tied to the cost of oil which has be up and down for years. In the past, we were dependent on the Saudis for oil, but with all the other methods now, we have been able to be less dependent. The Saudis have found that China will take all the oil they can buy. And, Canada buys all the gasoline they can get from us. Those are the basic ingredients for understanding supply and demand and the cost of oil and gasoline.

If oil is $50 per barrel, gasoline is cheap - about $2 per gallon. If oil is $80 per barrel, gasoline is not cheap. The problem I have is that I don’t understand why gasoline prices rise immediately when oil goes up, but do not decline immediately when it goes down. Sometimes it will take months before prices drop to match the drop of oil prices. But, just one day of higher oil, gets higher gasoline the next day.

Right now gasoline prices are rapidly heading to $3 per gallon from less than $2.50. Some states are already predicting $5 before summer.

As usual, when I don’t understand something, I have a solution.  Quit driving and go back to riding horses.

And, watch the environmentalist go crazy.

PMO
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