Higher Gas Prices to Stay

Many factors influence the price of crude oil and gasoline pump prices. Gasoline prices are a direct function of crude oil prices. Crude oil is the feedstock for refined gasoline.

Consumers believe they deserve low gasoline prices and consumers have long benefited from the oil industry they love to hate.

There are several reasons gasoline prices will remain high and may go higher.

We are at war, and war breeds uncertainty.

The dollar has declined in relation to other benchmark currencies.

Worldwide production of crude oil is near capacity.

No new giant fields have been found in more than 25 years.
Drilling and operating costs have soared.

Domestic refining costs have increased.

Demand outside the United States is dramatically increasing.
The oil sector has been weakened by decades of poor profits,
Economically attractive energy alternatives to gasoline are more a wish than a promise.

We must recognize that the age of cheap energy is coming to an ugly end and start planning accordingly.

Wayne E. Swearingen

Updated 01-23-2006

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