People here surprised on oil prices? Better get used to it.
For some reason the US media keeps reporting prices for WTI Cushing crude, which runs a bit cheaper, to a lot cheaper, than Brent crude, Brent is pretty close to what oil really costs on the global market, ie, if you buy out there in the real world, the prices will be pegged to current brent prices, or maybe the new saudi sour index, but definitely not cushing, cushing just relates to Oklahoma, landlocked, prices, which don't reflect anywhere outside that zone. Cushing only reflects a relative tiny percent of global oil production, and is low only because there's currently no direct pipeline to the gulf coast, so that market actually gets glutted now and again, dropping the prices. Today for example custhing is at 107, and the us media will loyally report that oil is at 107, when it's actually at 122 as I type this. So american consumers get confused. The oil refined on the coasts trades globally at the higher rates, discounts for lower quality heavy sour crudes, but not huge discounts. One of the drivers of that drop has been canadian tar sand oil which at least in part goes to Cushing now, for those interested in such arcana.
Despite how the media talks about it here, the stuff is really easy to understand, when more people want a commodity that has finite production levels globally than is available for consumption, the price rises until enough people get knocked out of the market, or countries as a whole, to create new equilibrium price, which is currently running around 120 a barrel. A barrel is about 42 gallons if I remember right, and they get something like 1/3 to 2/3 of that as diesel and gasoline. So yeah, the price is going to rise, and keep rising, otherwise the refineries would lose huge money. That's one of hte reason they are closing refineries here now, they know what's up. People who produce the crude of course do well, just check Exxon profits, or Aramco in Saudi Arabia, or Petrobras in Brazil. And that's just what happens now, with global production static at around 75 million barrels a day. Wait until it start to decline in real terms, that's slated for around 2015 according the us military, who did a recent whitepaper on this problem.
If you're math challenged, even assuming that basically all the petroleum in ther barrel is turned to gas / diesel, which never actually happens, some becomes low grade gunk like asphalt and bunker fuel, that 120 a barrel price means wholesale cost of gas now today is 3 a gallon. And that's with no refining costs, no transport, and no retail costs like gas stations added on. Actually a bit more I think, depends of course on what the refiner is actually paying.
Real oil prices:
With China, India, and others, now aggressively expanding consumption, the days of cheap easy to get oil are long past, despite what blatant political panderers like Gingrich pretend, but even he knows better, he's been briefed on this stuff just like everyone else has been who has served in congress.
US gasoline is still absurdly cheap though, should be double what it is, that would create incentive to stop using it, wasting rather.
What stuns me is that I still see people buying large pickups and suvs, as if you can make geology go away with happy thoughts. Strange. Cheap gas is not actually a human right, it's a glitch in history, nothing more, and it can't repeat because it was a one time event, if you got to enjoy it, cool, if not, that's life.
But yes, gas prices make me really cranky, I can't believe they are still low enough to where people can actually consider that living in suburbs and commuting tens or hundreds of miles is actually an acceptable notion of life, ie something that it's a good idea to do in the first place.
Sadly, complaining isn't going to help create more oil, that had to start some millions of years ago, a bit late now to worry on it. And with so many spigots opening, dropping personal use isn't going to make a heck a lot of difference either, it's all getting used today, not really any extra out there. Now changing behaviors.... that would certainly plant some seeds for the future, but don't expect that either, people are stubborn that way. This is why I've decided to only backpack where I can either get to by public transit or by sharing rides, harder to do, but also rewarding in certain ways.