$10 GAS COMING SOON, UNLESS...

$10 GAS COMING SOON, UNLESS...
Swiss America Research Report

By Craig R. Smith, CEO SATC
October 2004 -- Updated: August 2005, April 2006, May 2008

FOREWARD -- $5-10/gallon gas ahead unless...the "running out of oil scare" is debunked.
World Net Daily, Aug. 2005

"Peak oil is coming in November, and could bring humankind to the brink." -Kenneth Deffeyes, ex-Princeton professor, "Peak oil' spells cataclysm for US, oil theorist warns" -Oregonian 8/26/05

Michael Economides, Professor of Petroleum Engineering at University of Houston was on CNBC last week predicting $100 per barrel oil in 2006. His reasoning was similar to mine regarding supply demand issues and Middle East "wild cards".

I've recently told CNN, CNBC and FOX NEWS that I think we'll see $150 oil before we see $80 oil again. Goldman Saks now predicts $200 as a "peak oil".

The term "Peak Oil" refers to "Hubbert's Peak", a bell shaped curve which geologist theorize marks the beginning of the end of plentiful oil forever.

But today I want to present some fresh food for thought about our emerging "oil crisis".

According to the mainstream view, peak oil is set to occur around 2006-2008. When peak oil occurs, experts say production will decline approximately 3% per year during a time when global demand is increasing at 3% or more per year. At that point oil could soar to $150-$200 per barrel, say the oil crisis experts.

But what if these experts are all wrong? What if oil is not really as scarce of a resource as we have been led to believe? Keep in mind that ever since automobiles were first invented, we've had predictions that we're going to run out of oil, yet so far, they've all proven to be wrong.

Imagine with me for a moment that the whole story behind the "running out of oil scare" is also based on a faulty theory. That's the premise of my upcoming book, Black Gold Stranglehold: The Myth of Scarcity and the Politics of Oil co-written with Dr. Jerome Corsi for release in October 2005.

The Fossil Fuel Theory

The predominant theory is that oil is a "fossil fuel," produced from decaying pre-historic forests. Since pre-historic forests would be a limited resource, it follows that oil would also be a limited resource. So, the theory goes that eventually we will use up all the oil reserves, especially given the increasing demands of an industrialized world where the US must now compete with countries like China and India for available oil supplies.

Here's the problem: this theory fails to take into account available evidence. Despite increased oil demand, the amount of proven oil reserves in the world has never been larger. There is now credible scientific evidence suggesting that the earth produces oil on an on-going basis and that its origin has nothing to do with fossils or pre-historic forests.

The work of Dr. Thomas Gold has generated an alternative theory, whose premise is that oil is produced by a continuing bio-chemical action below the surface of the earth, and that oil is forced to the surface of the earth by the centrifugal force resulting from the earth's rotation.

In Black Gold Stranglehold, we systematically expose the fraudulent science that has made America so vulnerable to ongoing oil shocks: the belief that oil is a fossil fuel and that it is a finite resource.

The politics of oil

Americans now consume more than 25 percent of the world's oil, but have control over less than 3 percent of its proven oil supply. This unbalanced pattern of consumption makes it possible for foreign governments, corrupt political leaders, terrorist organizations, and oil conglomerates to hold the economy and the citizens of the United States in a virtual stranglehold.

Oil producing countries and oil companies have worked hard to perpetuate the myth of oil as a scarce resource in order to keep the price of oil high. There is no greater proof of this than the direct relationship between skyrocketing gas prices and the explosion of wealth among those who control the world's supply of oil.

Liberal politicians buying into the idea that oil must be conserved have demanded that billions be spent on energy conservation, and have resisted our using proven oil resources such as those discovered in Alaska. [See "'Godforsaken' ANWR: To drill or not to drill?].

Today there are 100 years of proven reserves fully discovered. We should use that oil now, making sure enough is constantly on the market to maintain reasonable prices.

One hundred years ago, our primary method of transportation depended upon utilizing horses and burning coal. One hundred years from now will be sufficient time to develop safe alternatives, including solar and nuclear power, as well as alternative liquid fuels.

With oil now cresting $70 a barrel, unless the U.S. makes some serious moves to obtain and develop significant oil assets, we will see economies like China and India continue to grow while we shrink.

Will we hit $5 per gallon gas? Unless we begin more exploration for deep-earth oil, I fear the answer is yes. Keep in mind that gas is already over $4-$5 per gallon in the top 10 most expensive cities in the world including Hong Kong, London, Paris, Amsterdam, and Seoul.

INTRODUCTION - A SUPPLY/DEMAND CRISIS

A storm is coming - an inflationary "perfect storm" whipped up by skyrocketing oil prices that will lay waste to millions of portfolios if investors don't prepare.

Today the U.S. has less than 5% of the world's total population, but consumes 25% of the world's total supply of oil. Oil prices have jumped from $17 in 2001 to over $70 in 2006!

The United States demand for oil is up 3.4% in 2004, while average daily imports of crude oil have climbed to a record high of 11 million barrels a day.

OPEC is already pumping at its highest level since 1979 and has said it will raise production to 30.5 million barrels per day in November 2005. And yet, prices still rise.

China's refineries have processed 17% more crude so far this year than in 2003, while crude imports have soared nearly 40% from last year. India's crude oil imports are expected to rise by 11% in 2004-2005 as demand rises by nearly 4%.

Demand is simply swamping available capacity, and that means high oil prices are here to stay.

Recently, the Department of Energy said crude stockpiles fell to the lowest level in five months, and the situation is unlikely to improve anytime soon. The cheap, easy places to find oil are already being pumped; new sources will be both expensive and hard to read.

Could oil prices hit $80, $100 or even $200? They sure could. Keep in mind that today's $70 price tag is still not as high as the oil spike in the 1980s, when the Iran/Iraq war pushed inflation-adjusted oil to the equivalent of $85-$90 a barrel today (thanks to a devalued U.S. dollar).

Crude oil accounts for about 44% of the cost of a gallon of regular grade gasoline. So, if oil prices triple, from $30 per barrel in 2004 to $80-$90 in 2007, the cost of a gallon of gas could move up from $3.00 presently to $4 to $5 per gallon!

COMING SOON: $5 GAS IN THE U.S.

"When gasoline goes to $5 a gallon in the U.S., the Walmart parking lot will be full of bikes." -www.bikeforums.net

Gas is already well over $4.00 per gallon in all of the top 10 most expensive cities in the world including Hong Kong, London, Paris, Amsterdam, and Seoul, according to the latest analysis of retail gas prices in 80 locations worldwide by Runzheimer International, the Rochester, Wisconsin-based management consulting firm.

At the other end of the scale, drivers pay $1.00 or less per gallon in Caracas, Venezuela; Jakarta, Indonesia; Cairo, Egypt; Kuwait City; Kuwait; Manama, Bahrain; and Ridayh, Saudi Arabia, with a low of 28 cents per gallon in Caracas. All, except Egypt, are oil-producing nations.

A U.S. gallon of self-serve unleaded regular gasoline in Hong Kong sells for $5.34; in London, England, $4.55; and in Paris, France, $4.41. In addition to the 28 cent cost in Caracas, this same gallon of gas sells for only 74 cents in Jakarta, 75 cents in Cairo, and 77 cents in Kuwait City.

In comparison, in January 2003 self-serve unleaded regular gasoline averages $1.48 per gallon in the United States and $2.10 in Canada.

ACCORDING TO SOME OIL EXPERTS

The world is about to run out of cheap oil forever and change dramatically. Within the next few years, global production will peak, say the experts. Thereafter, even if industrial societies begin to switch to alternative energy sources, they will have less net energy each year to do all the work essential to the survival of complex societies.

"We are entering a new era, as different from the industrial era as the latter was from medieval times. Dwindling energy resources in the 21st century will lead to resource wars in the Middle East, Central Asia, and South America," according to THE PARTY'S OVER by Richard Heinberg.

The growing Middle East control of the oil market is likely to lead to a radical and permanent increase in the price of oil before physical shortages begin to appear within the first decade of the 21st century.

Two years ago, my friend and talk show host, Chuck Harder wrote: "There is a little quiet secret that JUST MAYBE the Middle East does not have as much RECOVERABLE OIL as they expected. Some experts feel that the output is maxed at this time and will soon drop. While other potential oil lies in the USA - our foolish Congress will never allow it to be tapped due to the screaming bunch of enviro-nuts who have not really studied the issue." FUTURE SHOCK -10/14/03

FOUR KEY TRENDS

"RESOURCE WARS," author and International security expert Michael T. Klare argues that in the early decades of the new millennium, wars will be fought not just over ideology, but also over access to dwindling supplies of precious natural commodities. "The recent explosive conflict between the United States and Islamic extremism stands revealed as the predictable consequence of consumer nations seeking to protect the vital resources they depend on," says Klare.

In Klare's newest sequel book, "OIL WARS," he sees the nation's energy behavior as dominated by FOUR KEY TRENDS:

1) an increasing need for imported oil;
2) a pronounced shift toward unstable and unfriendly suppliers in dangerous parts of the world;
3) a greater risk of anti-American or civil violence;
4) and increased competition for what will likely be a diminishing supply pool.

IMPENDING WORLD OIL SHORTAGE

HUBBERT'S PEAK: THE IMPENDING WORLD OIL SHORTAGE by Kenneth S. Deffeyes states, "The 100-year petroleum era is nearly over. Global oil production will peak sometime between 2004 and 2008, and the world's production of crude oil will fall, never to rise again. If nothing is done to reduce the increasing global thirst for oil--energy prices will soar and economies will be plunged into recession as they desperately search for alternatives."

The only answer, Deffeyes says, is to move as quickly as possible to alternative fuels--including natural gas and nuclear power, as well as solar, wind and geothermal energy. "Running out of energy in the long run is not the problem," Deffeyes explains. "The bind comes during the next 10 years: getting over our dependence on crude oil."

Author Colin Mason, in his book "THE 2030 SPIKE: COUNTDOWN TO GLOBAL CATASTROPHE paints an even bleaker picture of the future. "The 2030 decade will see six "drivers" converge with unprecedented force in a statistical "spike" on the graph paper of life. Depleted fuel supplies, rampant population growth, poverty, climate change, famine and water shortages are all on a crash course that could plunge the world into a global dark age."

MIDDLE EAST DEPENDENCE - TERRORISM WILD CARDS

Because of the size of Middle East oil reserves and the fact they have conservatively produced, OPEC's Middle East producers are naturally thrust, more than ever before, into control of world oil supply in the very near future, and also regarding natural gas. We all know how much their actions have controlled ours in the past when we produced a higher share of our needs -- how about in the future as our production and reserves decline and consumption and import ratios swell?

It's up to large energy-deficit-consuming nations like the U.S., which are rapidly depleting their own reserves with our insatiable and unsustainable appetites, to be responsible for our own actions and not feel like we are entitled to a 'free lunch' from resources owned by others.

This seems to mean U.S. vital interests in the Middle East region are greater than ever -- and the U.S. is moving into a position less in control of its energy destiny than ever before.

Then there are the terrorism "wild cards," like al-Qaeda terrorist groups which are hell-bent on bringing the U.S. down -- by using airplanes, computers, economics or oil.

"Sell oil for gold, Mahathir tells Saudi Arabia" Forbes reported in Jan. '04, ... "Former Malaysian Prime Minister Mahathir Mohamad said on Sunday that Saudi Arabia should sell oil for gold, not dollars, to avoid being "short-changed" by a decline in the U.S. currency ... He suggested countries tally their total annual imports and exports and settle the difference at the end of the year in "gold dinars."

Recent news supports the idea that the Gold Dinar, with support from 53 other Islamic nations, may be a planned offensive against the use of the dollar as a settlement currency for oil. It is perceived, and correctly so, that the Islamic world is controlled via the use of the US dollar as the main settlement currency. (Full Story)

ECONOMIC IMPACT OF ANOTHER OIL SHOCK

"Central Banker Says Oil Clouds Outlook" -REUTERS, 10/22/04

This coming oil crisis will create economic and political discontinuity of historic proportions, as the world adjusts to a new energy environment.

According to Merrill Lynch's David Rosenthal, each 1-cent rise in gas prices sucks about $1.3 billion a year from consumer spending. Since 9/11, higher oil prices have taken more than $600 billion out of consumers' wallets, not to mention the trickle-down inflation that higher oil prices bring.

According to Stephen Roach, Morgan Stanley economist, "With oil prices now in the high $60s, there is good reason to treat this development as yet another in a long string of energy shocks. When a weak economy is hit by any type of a shock, recession normally results."

"At the current level of around $60, oil prices are over 100% above the $29 average that has prevailed since early 2000 � the "true" shock probably comes with $80-$100 oil. That would represent enough of a spike, in my view, to put it in the ballpark with full-blown oil shocks of the past. A $10 increase in oil prices knocks about 0.4% off GDP growth. In my view, America's saving-short, overly- indebted, job- and income-constrained consumer looks as vulnerable as ever."

According to the International Energy Agency, in 2002, China's oil intensity -- primary oil consumption per unit of GDP -- was 2.3 times that of the average OECD developed country; India is even worse -- fully 2.9 times the OECD average. Little wonder that China, which makes up slightly less than 4% of world GDP, accounted for fully 7% of the world's crude oil consumption in 2003. All in all, it now appears that the world is being subjected to its fourth oil shock in 30 years."

INFLATION + RECESSION = STAGFLATION

"Oil Bubbles Over $70 a Barrel - New High, Dow Hits The Skids" -CBSMW, 8/30/05

So, we facing a probable recession, if the oil spike continues AND price inflation results - a financially deadly combination birthed in the 1970s known as "stagflation."

THE OIL FACTOR, by STEPHEN LEEB, editor of the "Complete Investor" newsletter, believes the U.S. economy is headed for a significant fall because of a severe shortage of oil, which has been inextricably tied to the economy for the past 30 years. "Since 1973, the economy and stock market have danced to oil's tune. Sharp rises in oil prices have led to recession/stagflation and plummeting stocks, while declining prices or prices that are just mildly uptrended have led to good times," says Leeb.

Rising oil prices bring with it rising inflation -- no rocket science here. Rising inflation brings rising commodity prices on everything, which boils down to less money in consumer's pockets, which drives 2/3 of the U.S economy, which drives the world economy -- or used to anyway.

The last oil crisis started with terrorism and today's oil crisis is no different, only worse this time, given all the other factors covered so far.

What about the stock market? In December 2003 John Mauldin reported on the relationship between oil prices and stock prices: "We find strong evidence that changes in oil prices forecast stock returns. This predictability is especially strong in the developed markets in our sample countries and the world market index. In 12 of the 18 countries, changes in oil prices significantly predict future market returns on a lagging monthly basis. Not surprisingly, a rise on oil price suggests a lower stock market and a drop in oil price infers a rise in stock prices. The magnitude of the oil price shift is also carried over into the magnitude of the expected increase/decrease in stock prices."

What about the Real Estate market? According to Daily Reckoning's Chris Mayer, "It is hard to look at today's market and not see housing as a potential panic spot. It is like looking at a normal- sized man with elephant ears: It's hard not to notice. The housing market has all the makings of a bubble - lots of debt (mortgages), artificial government stimulation, incredible price increases and a belief that housing is always a good investment. The United States has not seen such a long bull market in housing since at least the 1950s."

Grant's Interest Rate Observer notes, "Since the stock market peaked, Americans have shifted their hopes for capital appreciation to the roofs over their heads, net of the mortgages on their backs."

INFLATION-PROOF YOUR PORTFOLIO

The coming oil shock will affect every investment you own. It is clearly unstoppable. As inevitable as the floods that follow torrential rains.

I'm terribly concerned that tens of thousands of investors will watch in despair as the profits they've made over the years slip away during the next oil shock.

Hundreds of American businesses, from the smallest "mom and pops" to the largest corporations, will capsize in a churning sea of change. But not you. Not if I can help it.

Inflationary pressures are rapidly changing. Some investments will soar, while many more will plunge. Anyone who bets on a continually rising stock market in which everybody profits, is destined for utter failure!

Ever since the early 1960s, the inflation trend has been the scourge of investing. Inflation is the one wild card that can whip investment markets into a frenzy, cut your true wealth by half in just a few years and completely derail an otherwise sound investment strategy.

In the late '60s inflationary surprises ripped through the stock market, dropping the Dow some 35% ... in the 1970s stocks suffered through a tortuous two-year bear market as inflation spiraled ... in the '80s Paul Volcker nearly plunged the U.S. into a 1920s-style depression when he miscalculated the strength of "runaway" inflation. Now today, after years of relative calm on the inflation front, the risk of grievous error is just as strong as at any point in history.

So, if large stock and even real estate markets fall during an inflationary-recession, what assets are there left to protect your assets from the most dramatic economic trend-shift of the last two decades?

RECORD OIL PRICES BULLISH FOR GOLD

"Gold Reaches 25-Year High" -Bloomberg

Historically, higher oil prices also bring with it higher gold and other commodity prices. The Aden Sisters have been following this trend for over three decades and their conclusion is that the present record high oil prices is very bullish for gold.

"The oil price keeps hitting new record highs. High oil prices reflect two things. The enormous appetite the world has for oil, especially with China adding to the demand side since it's now the second largest consumer of oil after the U.S. The second factor is the supply side. Any act that might disrupt or limit the oil supply causes the oil price to rise. That's what recently happened when Yukos, Russia's largest oil exporter, was ordered to halt production. Plus, oil disruptions in Iraq have added more fuel to the fire."

"It all boils down to uncertainty. As long as we have uncertainty in the supply or demand side, we'll continue to see higher oil prices. And since the oil price strongly affects inflation, this means inflation is headed higher too. This in turn will be good for gold since gold is the maximum inflation hedge." [AdenForecast]

CNBC Anchor and economist, Larry Kudlow reported to National Review magazine back in 2001, "Gold is a useful benchmark because its monetary purchasing power is relatively constant over long periods of time. Hence, over time, an ounce of gold should buy roughly the same number of barrels of oil . In the past decade, an ounce of gold bought seventeen barrels of oil."

Using Kudlow's formula, that means that $70 per barrel oil should bring $1,190 per ounce gold! We shall see.

I remember back in 1979, when Iranian students seized the U.S. Embassy, taking 90 hostages and the Russians invaded Afghanistan. At home, Americans faced rising oil prices and a 13% inflation rate. The oil crisis caused a flight to quality assets, like U.S. gold coins, among investors and gold prices went through the roof. From Summer 1979 through early 1980, gold soared from $200 an ounce to $850 and silver rocketed from $4 to over $50 per ounce - a tenfold increase.

This buying frenzy that swept the oil and bullion markets then spread to all tangible assets. Prices for U.S. rare coins and stamps skyrocketed almost ten-fold from mid-1979 to mid-1980. During this same period, stocks were out of favor. In 1982, the cover of Business Week actually trumpeted "The Death of Equities."

21ST CENTURY GOLD RUSH, 1980-STYLE?

In a classic inflationary scenario, too much money chased too few goods. The birth of "numismatic" coins as a legitimate category of investment can also be traced to this tumultuous period that started back in the early 1980s.

Although "numismatics" as a form of collecting art and studying history existed as far back as ancient Rome, it was not until 1979 that the financial community began to discover benefits of owning U.S. rare coins.

The price of the 10-piece set of common date U.S. gold coin set stood at $5,325 in of January 1979. But by January 1980 it reached $16,500 - a threefold increase. The coin market peaked in January 1981, with the same 10-piece set now valued over $35,000.

Such dramatic increases in the coin market had never before been seen - nor even dreamed of. Coin collectors who had patiently built collections during the 1960s and 1970s were rewarded with amazing profits - if they decided to sell. Many coins bought during the mid 1970's for $500 were sold during this period for $2,500-$3,000.

According to a 1998 study by Dr. Raymond Lombra, Associate Dean, Research and Graduate Studies at Pennsylvania State University in State College, Pa., "The two top-performing investments over the past 25 years were stocks, at 14.6% per year, and high-quality, rare U.S. gold coins, at 14.3% per year. A broader index of rare U.S. coins, including all types in grade Mint State-65 (on a scale of 1 to 70), performed at 18% per year over the same period."

* Will the coming oil/inflation crisis impact the tangible asset market the same in the 21st century?
* Will oil-targeted acts of terrorism continue to hold America in a Middle-East stranglehold?
* Will the uncertainty end soon, or continue to escalate? Will another oil spike tip us into a recession (or worse) as some economists fear?

Either way, I strongly recommend diversifying at least a small portion of your assets into tangibles, as a hedge against the unknowable. That way you are covered no matter what happens with oil, terrorism, recession or inflation!

To help readers understand the growing economic threats to your assets read my latest annual newsletter: 2008: THE NEXT STAGE -- FREE Offer! ($19.95 value)

Call our offices toll-free at 800-289-2646 between 8am to 6pm PT Monday-Friday to request these new resources.


ADDENDUM

GASOLINE/OIL FAQ

The following are answers to some of the commonly asked questions about the fuel price situation.

Q. WHAT ARE THE COMPONENTS OF THE RETAIL PRICE OF GASOLINE?

The cost to produce and deliver gasoline to consumers includes the cost of crude oil to refiners, refinery processing costs, marketing and distribution costs, and finally the retail station costs and taxes. The prices paid by consumers at the pump reflect these costs, as well as the profits (and sometimes losses) of refiners, marketers, distributors, and retail station owners.

In 2003, the price of crude oil averaged $28.50 per barrel, and crude oil accounted for about 44% of the cost of a gallon of regular grade gasoline. In comparison, the average price for crude oil in 2002 was $24.09 per barrel, and it composed 43% of the cost of a gallon of regular gasoline. The share of the retail price of regular grade gasoline that crude oil costs represent varies somewhat over time and among regions.

Federal, State, and local taxes are a large component of the retail price of gasoline. Taxes (not including county and local taxes) account for approximately 27 percent of the cost of a gallon of gasoline. Within this national average, Federal excise taxes are 18.4 cents per gallon and State excise taxes average about 21 cents per gallon. 2 Also, eleven States levy additional State sales and other taxes, some of which are applied to the Federal and State excise taxes. Additional local county and city taxes can have a significant impact on the price of gasoline.

Refining costs and profits comprise about 15% of the retail price of gasoline. This component varies from region to region due to the different formulations required in different parts of the country.

Distribution, marketing and retail dealer costs and profits combined make up 14% of the cost of a gallon of gasoline. From the refinery, most gasoline is shipped first by pipeline to terminals near consuming areas, then loaded into trucks for delivery to individual stations. Some retail outlets are owned and operated by refiners, while others are independent businesses that purchase gasoline for resale to the public. The price on the pump reflects both the retailer�s purchase cost for the product and the other costs of operating the service station. It also reflects local market condi- tions and factors, such as the desirability of the location and the marketing strategy of the owner.

Q. IF THIS PRICING ISSUE REVOLVES AROUND SUPPLY AND DEMAND, WHY CAN'T REFINERS SIMPLY INCREASE GASOLINE PRODUCTION IN ORDER TO LOWER PRICES AT THE PUMP?

A. By and large, U.S. refineries are already producing at maximum capacity and U.S. demand for gasoline exceeds this capacity. The difference is made up by importing gasoline to meet the demands of the American public. However, the combination of growing demand for petroleum products around the world and restricted crude oil supply have caused the amount of gasoline available for import to the U.S. to decline; thereby increasing the price of gasoline.

Q. DON'T OIL COMPANIES STOCKPILE GASOLINE? WHY CAN'T WE TAP INTO STOCKPILED RESOURCES IN ORDER TO GET US THROUGH THIS PERIOD OF HIGH CRUDE OIL PRICES?

A. The refining and distribution system in the U.S. is highly efficient. Oil companies do carry inventories to meet commercial requirements, but they do not stockpile surplus product.

Q. INSTEAD OF IMPORTING CRUDE OIL FROM OVERSEAS, WHY DON'T YOU BUY IT FROM U.S. SUPPLIERS - WOULDN'T THAT BE CHEAPER?

A. The United States cannot satisfy its oil requirements from domestic production, and currently imports half the oil it needs. Moreover, crude oil is openly traded as a global commodity and its price around the world is determined by prevailing market conditions. When OPEC countries curb their output, the worldwide price for crude oil rises. Similarly, when crude oil production increases, the price of crude oil tends to fall.

Q. WHAT ABOUT THE STRATEGIC PETROLEUM RESERVE? CAN'T WE DRAW ON ITS CRUDE OIL RESERVES TO LOWER THE PRICE OF CRUDE AND THEREFORE GASOLINE?

A. The purpose of the Strategic Petroleum Reserve (SPR) is national defense - to ensure a supply of crude in times of national emergency. The SPR was not designed as an instrument to manipulate energy prices. Free market economics work - the United States' buoyant economy is proof of this. Gasoline is a commodity and is therefore extremely sensitive to changes in market conditions, which is why Texaco strongly believes the market should be left to dictate prices. Government intervention through the use of the SPR would have very little, if any, lasting effect on crude oil prices in our view.

Q. WHY IS GASOLINE MORE EXPENSIVE IN SOME STATES THAN OTHERS?

A. There are several reasons for this, ranging from legislation that requires more expensive high-specification gasoline to be sold in certain markets, to higher distribution costs in others. One of the main reasons for price variations is the taxes levied on gasoline, which vary from state to state. In 1999, gasoline taxes averaged 43.5 cents per gallon in the United States. Last year in Connecticut, drivers paid a total of 54 cents per gallon in federal and state taxes, whereas drivers in Georgia only had to pay 30 cents in gasoline taxes.

Q. WILL GASOLINE PRICES FALL IF THE PRICE OF CRUDE OIL DROPS?

A. Gasoline is a commodity and is therefore extremely sensitive to changes in market conditions. Just as higher crude prices lead to higher gasoline prices, so lower crude prices lead to lower gasoline prices. It is important to remember that changes in crude oil prices (up or down) do not immediately translate into a change in the price of gasoline. For more information about gasoline pricing, please visit the American Petroleum Institute


THE TRUTH ABOUT GASOLINE
Steep increases in gasoline prices this spring and last summer have made many motorists long for the days of cheap fuel. While gasoline prices have increased steadily since 1998, gasoline is less expensive now that it was more than 80 years ago when you view it in terms of a dollar adjusted for inflation. Gasoline is not something most of us think about much. It�s simply part of our daily lives, something we pump into our vehicles to make them move. Some people may reminisce about the days of 30-cent-per-gallon gasoline, when you could fill your car�s tank for less than five bucks. But they�re forgetting that it took two to three hours to earn that $5. Gasoline is not something most of us think about much. It�s simply part of our daily lives, something we pump into our vehicles to get make them move. But when gas prices rise dramatically, consumers start asking questions: Why does it cost so much? How can the price fluctuate so drastically? Where does it come from? How dependent are we on other countries for our supplies? What are the alternatives? Although these questions may sound simple, the answers are anything but. Following is an overview of the fuel upon which we Americans have become so reliant, and steps we can take to decrease that dependence.
Oil equals corruption, global survey finds
Associated Press
Oct 20, 2004

London � Most oil-producing nations are also rife with corruption, and oil companies should provide more information about their operations to help clean up the market, a global watchdog group said Wednesday in an annual report.

Angola, Azerbaijan, Chad, Ecuador, Indonesia, Iran, Iraq, Kazakhstan, Libya, Nigeria, Russia, Sudan, Venezuela and Yemen scored very low in clean government practices, said Transparency International chairman Peter Eigen in releasing the Corruption Perceptions Index for 2004.

"In these countries, public contracting in the oil sector is plagued by revenues vanishing into the pockets of Western oil executives, middlemen and local officials," he said.

CORRUPTION INDEX
Least Corrupt
1. Finland 9.7
2. New Zealand 9.6
3. Denmark 9.5
3. Iceland 9.5
5. Singapore 9.3
6. Sweden 9.2
7. Switzerland 9.1
8. Norway 8.9
9. Australia 8.8
10. Netherlands 8.7
12. Canada 8.5
17. United States 7.5
Most corrupt
133. Angola 2.0
133. DR of Congo 2.0
133. Ivory Coast 2.0
133. Georgia 2.0
133. Indonesia 2.0
133. Tajikistan 2.0
133. Turkmenistan 2.0
140. Azerbaijan 1.9
140. Paraguay 1.9
142. Chad 1.7
142. Myanmar 1.7
144. Nigeria 1.6
145. Bangladesh 1.5
145. Haiti 1.5

Scores are based on a scale of 0 (most corrupt) to 10 (least corrupt).


DISCLAIMER: All of the information in this story is believed to be true, however errors are possible.
Past performance is no guarantee of future performance. All investments have risk.
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