Gas prices for high test is $4 to $5 per gallon

Augustus

Contrary to popular belief, presidents don't have a magic dial behind their desk that affects gas prices. Neither Democrats nor Republicans. Obama's right in that there aren't any short-term solutions.

Policy certainly can effect gas prices, but it's more a mental game than an actual physical effect. Opening up the strategic oil reserve or allowing more drilling does calm the oil futures market, but only because people's fears & greed drive the market.

Really though, it's supply and demand. The rest of the world is using more and more oil, so prices will only continue to rise for everyone. 18 million cars were sold in China last year, almost 6 million more than in the US. I'd wager that a fair number of those 18 million cars are to people who have never had a car before. People who have never needed X gallons of gasoline a week. India is also emerging as a significant market as well. That supply has to come from somewhere.

This recent surge is because we're coming out of winter in the US and because many economists think the world economy is regaining strength (a topic for another thread... )

But it's not all doom and gloom.

The flip side is that supply & demand economics works both ways. As prices rise, there's more incentive for companies to tap new sources of oil. The oil is there, it's just expensive to get it from the ground to your tank. Deeper capacity rigs & more complicated (and expensive) extraction techniques become fiscally viable. More incentives to develop alternative fuels. And when those things happen, more oil is introduced into the system, which calms down supply fears, which tends to stabilizes prices. It's all a matter of cycles.