Fuel Costs Climbing - President Has The Key

As fuel prices continue to increase and the memory of the summer of 2008 comes into focus for our country, let's hope the past repeats itself - or is at least given a chance.


Source: http://www.eia.doe.gov/


The per barrel oil price peaked in July of 2008, right along with the national average of diesel fuel. While we are far from the pinnacle of both, we are rapidly on course to meet them soon. The difference should be the painful memory of filling up to get to work at the expense of not eating or not paying bills.  All this while hearing daily conversations and declarations that it was a defining moment in the behaviors and policies of not just Americans, but people through-out the world.

Apocalyptic banter of a greedy President lining the pockets of his cronies filled the airways along with talk of new technologies taking over if the cost of fuel continued to increase (electric cars, wind and solar power, hydrogen powered cars... etc).

In the end it is just a memory to most.  But why? What happened? What turned the tide?

Malcom Gladwell is the author of The Tipping Point - How Little Things Can Make a Big Difference. This book defines and demonstrates the strange phenomenon of everyday struggles that change in an instant.

What is Fueling the Fire? – Diesel Prices on the Rise

Diesel fuel is almost $0.50 per gallon higher December this year over last. That is nationally as well as by region across the country (U.S. Energy Information Administration). The first question is always, “What does that mean for you?” while the second question inevitably comes… “Why the increase?”

The answer to the first question is simple – whoever bears the cost of the changing commodity comes out on the short end of the stick. As they say, $%@# flows downhill, so the majority (but not all) of the time it is the driver or carrier as they are at the end of the food chain. There is, however, a wide range of debate over the answer to the second question of “why”.

One consistent message being reported around the world is “distribution margin increases”. This is the easiest to understand. The price goes up so the distributors can put more money in their pockets. This is in addition to the price per barrel cost increases, so now we conclude that there are multiple components to the answer (no great surprise).

The message here in the US is that the ban on drilling in the Gulf of Mexico by President Obama has weakened our domestic supply resulting in the cost per barrel