The Cycle | February 22, 2013
>>> at the mercy of skyrocketing gas prices . we haven't seen a break in five weeks and experts say don't expect one until the spring. if you fill up for the weekend, a national average is $3.68, up 15 cents from last week and up 46 cents from last month.
>> i would last love to pay that.
>> last year was the expensive ever on average and while digging deeper in the pocket, big oil is turning a massive profit. $118 billion last year, alone. they're called big oil for a reason. being bigger gave them more pricing power but senator schumer wants to break up big oil . he says we now have only about four large companies, that means when prices go up, they go up much faster and when they come down it's much slower. but energy columnist dan dicker who's traded oil for two decades says schumer's plan won't help you at the pump. dan , why not?
>> see, it's kind of amazing. let me try to blow your minds.
>> we're ready.
>> on the east coast , no, if you're on the east coast , you fill up the tank. the gasoline not from one of the big four but from on the east coast a private equity company, carlisle and then owned by delta airlines . now, this is not unusual. in fact, in the last several decades, and in fact over three years particularly, all of the big oil companies getting out of the refining business because it may be really, really good right now but it was really, really bad for many, many years and looked very, very hard at other people to buy the refining assets from them and they have sold them all. sunoco is out of the business. conoco phillips is out. marathon oil is out of the business. the people you remember from -- my youth. not your youth.
>> the sinclair guy and the tiger in the tank and the connections between gasoline and oil companies is broken for several years. i don't know what schumer is talking about.
>> my mind is not blown.
>> mind blown.
>> you don't think that gasoline not made by oil companies is not --
>> it is.
>> most people think it is.
>> it doesn't surprise me. being broken up by that.
>> i think it's significant. what about also the fed's loose money policy? what about every time we print money , we go on a money printing binge and the price of oil goes up.
>> this is true but part of the reason you have money flowing in to bets like gasoline is because wall street has a tendency to find really hot trades and jump on them one after the other and one of the hottest trades over four months and particularly last two has been gasoline prices . we have seen, for example, in the stock market those refinery stocks done really, really well and commodities guys looking for the increase in the betting, too, and they have gone to the gasoline markets and seen a big rise, 50 cents in a month, for example, in gasoline prices and most of that has been what we call at least now speculation in the market.
>> not really about the supply and demand of what's going on in the gasoline market.
>> well, dan , i can tell you i do remember sunoco and marathon oil .
>> of course he does.
>> you're not alone there, either. i'm curious to ask you about we talk about gas prices in the united states and i wonder sometimes if we lose sight of this is a global market and other countries out there, china comes to mind with an exploding market for oil. and we're sort of at the mercy of the rest of the world really.
>> no, that is true, and but that's an unfortunate truth. looking at domestic gasoline or should be getting far, far better prices than what we are getting right now because our crude oil , in fact, is cheaper by about $25 than everywhere else around the globe and that should indicate we get a cheaper price for gasoline, too. we don't. because we have a lot of financial connections. i don't want do get, again, too deep in the weeds but the financial connections connect the price of gasoline to global crude oil prices instead of to domestic crude oil prices . if they were connected to domestic crude oil prices you would see prices about a dollar lower than right now so these are some of the problems when you get a big financial market that sets prices for people and what they pay at the pump.
>> well, dan , another thing that the president has focused on is trying to reduce the overall usage of gasoline and he's focused on fuel efficiency standards to do that. meanwhile, even though we're seeing prices rising, we pay less at the pump than most other places in the world. in fact, federal gasoline tax same since 1993 and inflation adjusted down about 40%. there was an op-ed in "the new york times" today and mit research scientists arguing we would be better off in terms of fuel efficiency reducing the usage of gasoline by increasing the gasoline tax and it would take less out of the economy than the fuel efficiency standards. what do you think of that idea?
>> i'm an advocate for all of these things. i think there's a time, we haven't raised the tax i think before reagan took office. that's a long time and we need to raise money somewhere to move ourselves forward toward renewables and the gas tax is a way to do that and, again, as the op-ed said, there's a better way to reduce the usage of gasoline than to increase the efficiency of cars. because, in fact, increasing the efficiency of cars, you get more miles to the gallon and people tend to drive more.
>> makes you want to drive more.
>> cheaper to drive. so, in fact, a gas tax hits immediately. drops the use of the amount of gasoline that each person uses. another way to move it forward and this is not as popular among the left with natural gas as a transport fuel. there's three attempts of congress in the last year and a half to move forward the natural gas conversation as a transport fuel and both sides of the aisle they have had problems with that. been two t. boone pickens plans and all voted down and have been motions to move us away from gasoline as the only way and bringing in some other sources, for example, so we can try to get off of this national gasoline price.
>> we said that the average is price is $3.62, i would love to pay that. i'm paying $4.50 and above for several years now i think as a new yorker. so that means somebody must be paying $3 for gas somewhere in america, right, if the average is $3.62. can you talk about why gas prices vary so much from state to state and region to region?
>> well, there are certain regulations that each state can put in for their emissions to meet whatever standards the states require. one of the strictest, for example, is in california. where, in fact, paying $5 a gallon right now for premium unleaded because they have to have, in fact, special refineries sited in california to make the grade they need to drive, to burn.
>> gas makes me think of gas cnascar but that's later. thank you very much.
>>> up next, when's the single greatest challenge facing black america today? an author answers that question. nd 2% to manage