As everyone knows, gasoline prices are rising again, recently topping $3 per gallon in California, that "green" tax and regulation hell. It would have been nice during the breather from sky high prices last summer if the government had taken steps to increase domestic production to forestall future increases, but instead the Obama administration has been working to reduce domestic production and increase our vulnerability to hostile foreign suppliers.
Gasoline has what's called an inelastic demand curve. That means that it takes large price changes to cause much change in the demand for gas. This works in both directions, which is why prices fell so much after the big run-up last year. It also works on the upside, so gradual increases in worldwide consumption are leading to the large upward price movement we are seeing now.
This tendency to large price swings means that relatively small increases in production put a large downward pressure on price. America has plenty of oil locked away offshore and in vast oil shale deposits in Utah, Colorado, and neighboring states, so it would be relatively easy for us to produce a couple of million extra barrels a day if the government would let industry do it.
The cost of Obama's anti-production strategy is probably a dollar or more per gallon increase in gas prices. The US consumes over 800 million gallons of oil per day, so about half a billion dollars a day due to unnecessary price increases goes overseas to benefit the Hugo Chavez's and Saudi princes. Obama's anti-production policy is, in effect, a huge tax imposed by his administration on Americans for the benefit of America's enemies.
With the help of an absolutely clueless and fawning media, he touts meaningless green energy fantasies as if they are a substitute for real energy production, and the population snoozes in ignorance as they work to provide billions of dollars for the benefit of foreign oil plutocrats.
It's really enough to make you weep.