Oil and gasoline prices are up substantially since mid-February. In some markets, gas pump prices have increased twenty cents in a day! Most media pundits and financial "experts" attribute this run up in oil prices to geopolitical tensions - Iraq, Iran, Nigeria, Venezuela, etc.

But look at the facts:  

Since the week ending 2/10/06, average daily US net petroleum imports have fallen about 15%, down about two million barrels per day. Since the week ending 2/24/06, on a smoothed, four week running average basis, average daily US net petroleum imports have fallen about 8%, down about one million barrels per day. (A comparable time period last year showed about a 2% decline.)

Prices began rising at about the same time that we began importing less oil and gasoline.

Why are we importing less?  Even though every country is demanding more oil, worldwide oil production has hit a plateau.  Behind all the headlines, oil importers are simply bidding against each other for less and less available total petroleum (crude oil + product) imports.

Everyone is jockeying for fossil fuels.  We're occupying oil-rich Iraq, we're rattling sabers at oil-rich Iran and Venezuela (aka Citgo) and Condi Rice is buddying up to the brutal dictator of Equatorial Guineau, Africa's third-largest oil exporter.  China's economy is growing twice as fast as ours, and they are playing hard to lock in long-term contracts for oil and natural gas.  Russia still has a lot of oil and natural gas, and Putin is using both as a negotiating tool with China and Europe. Now that their North Sea oil fields are almost tapped out, the UK is casting about for new sources.  

In my opinion, higher oil prices are causing the international tensions, not the other way around.  If oil production increases, we may see gasoline prices again stabilize at less than they are, but higher than they were.  If oil production stagnates or declines, gasoline will just keep heading up.

One guy wrote back, "For some reason, I keep seeing the "Mad Max" movies in my head when you talk about this stuff....."