March 1, 2012
Gas may be getting expensive, but talk is still cheap. So politicians are responding to the latest spike in petroleum prices as they always do: with a barrage of partisan accusation that has much more to do with exploiting the issue than addressing it.
… Please, everyone, just ignore this blather. Here’s what is actually going on: World crude oil prices determine the vast majority of the per-gallon price of gasoline — 76 percent of it, according to the U.S. Energy Information Administration. Those prices have been trending upward for more than a decade, largely because of surging demand in China and other emerging markets. Gas prices have followed suit.
… In fact, without those higher crude prices, there would have been less incentive for U.S. entrepreneurs to invest in fracking technology and produce the extraordinary new sources of shale oil in North Dakota and elsewhere that are creating jobs and wealth, and gradually liberating the United States from foreign sources of supply.
Federal Reserve policy probably has something to do with higher oil prices, too. Since the Fed’s zero percent interest rate cheapens the dollar, it takes more dollars to buy the same amount of oil and other commodities.