DENNIS SEID: 'Fear factor' is biggest reason for oil, gas rise

By Dennis Seid/NEMS Daily Journal

Here we go again with the gas prices, not that we should be all that surprised.
We’ve gone from paying less than $3 a gallon for gasoline a month ago to about $3.50. Filling up your car, truck or van is not a pretty sight.
First, a little lesson on what goes into the price of gas. According to the U.S. Energy Information Administration, this is how every dollar paid for gas breaks down:
• 68 cents for crude oil.
• 17 cents for refining and retailing.
• 15 cents for federal, state and local excise taxes.
The combined average excise tax – state and federal – on gas is 48.1 cents a gallon.
If it makes you feel any better, the South has the lowest combined tax at 38.5 cents a gallon on average. The highest is out West, at 58.3 cents a gallon, followed by the Mid-Atlantic states at 48.9 and the Northeast at 47.2
In Mississippi, the state tax is 18.4 cents a gallon, which is about the national average. Combined with the national tax, it comes to 37.2 cents.
Californians pay 65 cents, New Yorkers 63 cents and Hawaii 62.8 cents.
You’ve probably heard the term “fear factor” thrown around regarding oil prices. With instability in the Middle East, first in Egypt, now in Libya and now points of conflict elsewhere across the region, crude oil prices have skyrocketed.
According to oil industry experts and analysts, the supply of oil is fine.
Saudi Arabia said Thursday it produced 9.1 million barrels of oil a day in February, or 1 million barrels over its OPEC quota. It said it did do to help calm prices in the wake of production drops coming out of Libya.
The U.S. Department of Energy also said oil supplies increased more than expected. And OPEC said its 12-member cartel is producing more than 2.5 million barrels over its daily quota of 25 million barrels a day.
But any hint of a potential disruption shakes the market.
Remember the summer of 2008 when oil shot up to a record $147 and gas was going for $4 and more? By December, oil prices had plummeted and gas was back under $2.
We can only hope something like that will happen again.
Some have called for President Obama to open the Strategic Petroleum Reserve to help lower prices. There were similar cries three years ago for President Bush to do the same. And he didn’t. The last time the SPR was tapped was after Hurricane Katrina.
Increased domestic drilling has been the clarion call for years, and rightly so. But even drilling in ANWR, the Gulf Coast and off the East and West Coasts won’t be enough to allow the U.S. to wean itself totally from imported oil.
Building and buying more fuel-efficient cars, driving less and slower, carpooling and using mass transportation are some things we can do to use less gas and less oil.
And for your convenience, Daily Journal Business Reporter Carlie Kollath has a story on this page with some gas-saving tips.
I’ll take note as we load up the minivan and head to Gulf Shores for Spring Break, hoping gas doesn’t hit $4 while we’re down there.
Contact Dennis Seid at (662) 678-1578 or dennis.seid@journalinc.com