Oil Prices Sag, Pump Prices Soar, Companies In The Driver's Seat

Hurricane Ike might have caused some supply problems, so prices at the pump jumped over the weekend. Where regular gas last week in Milwaukee was $3.79, it was $4.09 Saturday.

But wholesale prices are falling because Americans are driving less and the supply system in tankers and storage tanks is full worldwide.

There is such a surplus of oil on the market that some OPEC members want the cartel to cut production because the wholesale price is now 30% off its summer peak of $147-a-barrel, and still declining.

Yet pump prices even pre-Ike had not yet reflected the steadily falling wholesale price and generous supplies.

After the hurricane season gives sellers the excuse they need to manipulate the price, cold weather will be used to explain spiking heating oil prices, along with increased natural gas prices, too.

Normally, winter gasoline prices fall as summer driving stops, but this winter we will hear the oil companies say they are converting more refining capacity to produce additional home heating fuel (which will not come down in price), creating a gasoline shortage and a higher pump price.

And don't get giddy about the resoures alleged to be under Alaska and off Florida and California.

By the time those supplies come in, if at all, they will be destined for the world market, and what remains here will reflect the increased price of exploration, piping, refining, shipping and international demand.

Oil and gas companies are not in business to sell you and me their products as cheaply as possible.

Just the opposite. Our best options to influence prices are conserving on a daily basis, and electing politicians who will promote conservation, mass transit, and all things relevant to alternative fuels