Stopping in to my neighborhood gas station today, I noticed that the cost for gas has now risen to $3.09 at the pump for a gallon of regular gas! That's a 24 cent increase at the pump in just the last 10 days!!

Perhaps, like me, you thought the oil companies were just being greedy. Or maybe you believed the nightly news reporter who says that gas prices went up because the crisis in Iran is affecting supplies of oil. These accounts are wrong on both points.

A couple of phone calls to area wholesale companies, proved to be fruitless. As no one wanted to talk to me about WHY area prices have risen so drastically. One person I spoke with pointed only to the cost of a barrel of crude oil on the market and quickly dismissed me and hung up.

Then I made one more phone call and got the answer I was looking for. I spoke with a person at the refinery in Evansville, and he helped me to understand the economics of local gas station pricing.

"Stations get deliveries on a daily basis. And if a station orders 10k gallons of fuel at X price, they need to recoup that cost. Even if the price of gas goes back down the next day, a station still might have thousands of gallons they purchased at a higher price."

This part I understand. It means when gas prices fluctuate wildly, local gas stations will follow the trends. That means the corner station will most likely keep prices on the higher side of the scale to protect against losing money. If the prices fall, they make a few more pennies on the gallon, until the trend starts to fall and pushes costs downward.

That made economical sense, but didn't get me to the real reason of WHY area gas prices have risen so dramatically? To which my source responded - "The stock market is the real reason for quick rise in costs".

So, that's where I focused next - Why is the stock market fluctuating so wildly on the cost of a barrel of crude oil? With a little searching, I found a book that might contain all the answers.

Dan Dicker, who published a book called Oil's Endless Bid: Taming The Price of Oil To Secure Our Economy, makes a strong case that if the government stepped in and regulated oil trading so that only investors with a genuine interest in the physical product, (such as airlines and heating oil companies, could buy and sell oil futures) then the price of oil would fall by 50% overnight and our economy would be much better off.

It turns out, Dicker says, "that the price has nothing to do with supply and demand for oil. It's the financial market for oil, filled with both professional speculators and amateur investors betting on poorly understood oil exchange-traded funds, who have ratcheted up the price of gas to such sky high levels".

But as a consumer, what protections do we have against over inflation of pricing? Is the state government responsible, or is it the Federal Government? Who is supposed to be protecting consumers? The answer - NO ONE IS!

Dicker believes it is largely because large financial firms with a direct interest in oil trading have made so much money with oil that they can afford to lobby Congress to block any significant reforms.

Does this mean that there is no hope for the little guy in the oil hungry world?  No, not at all. Remember this is an election year and politicians will be stomping the streets and shaking hands, trying to find out how to earn your vote.  If we all push for reform and the regulation of exchange of crude oil, we could all potentially be come winners.

I hate to say I'm a fan of more government, because I'm not.  But if we could cut gasoline prices in half and it takes money away from the fat cats on Wall Street - I'm in!

Tell us your thoughts - leave a comment below and let us know if you'd be in favor of the Federal Government stepping in?

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