Presidential candidates Obama and Romney square off tonight in the first debate of the campaign season. However, this debate will center around the economy. One issue that is certain to come up is the cost of driving.
After a brief respite from gas prices inches close to $4 a gallon, it seems as though the cost of driving our cars and trucks will continue to soar to new heights. Why? Well, it seems that oil refineries are experiencing lower than normal inventories. Net result: What oil is refined is selling for near or at record levels.
“Gas prices stay high,” a USA Today report stated, with the “2012 average for regular gasoline (price per gallon) is on track to be the highest on record.” In 2011 the average was $3.51 per gallon.” As of Oct. 1, 2012 the national average price is at $3.64. That is a record high.
While that’s down from $3.83 in August. September gas prices averaged $3.64 a gallon.
Gas Buddy shows regular gas prices are at $3.84 per gallon in the Brainerd lakes area, having dropped recently from $3.89 a gallon.
What should the price be? “Based on cost of domestic crude and seasonal driving patterns, gasoline should be averaging about $3.50,” said Patrick DeHaan, senior energy analyst for gasbuddy.com.
While gas prices have been following the price of light crude oil, which has been tracking downward from its 52-week high of $108.70 to a low of $77.25. In recent weeks the price has been leveling off at $92.50 a barrel, according to CNNMoney.
This could become a significant political football in the presidential and congressional races as the debate escalates over the marked decline in wages earned by average Americans versus the dramatic increase in the cost of gasoline since the 2008 election.
What was the price of a gallon of unleaded gasoline in 2008, just before the last presidential election? Prices for one gallon of regular unleaded gasoline varied in Minnesota in November of 2008 from a low of $1.99 to $2.04. Why was it so significantly lower four years ago?
Congress had allowed the ban on offshore oil exploration and oil shale expire, which in turn sent a signal to the markets that the United States was going to increase its domestic supply.
Since then, we’ve had the BP Oil spill that curtailed oil drilling in deep water areas of the Gulf of Mexico and the Keytstone XL Pipeline nixed. That pipeline was to have started in Hardisty, Alberta, Canada and run to Steele City, Neb., and eventually on to Texas refineries. That project was cancelled when the administration nixed the idea.
Bottom line? Higher prices at the pump will continue until the United States allows more oil exploration in the lower 48 states and Alaska’s vast oil-rich regions.