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Why do gas prices change from day to day?
 
Friday, May 09, 2008 - 06:27 PM Updated: 12:05 PM
 
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By JoAnn Merrigan

If you're  fed up with the price of gas, line up behind everybody else.  "To me what's going on is price gauging," one man at a gas station told me this week.  He was filling up his tank and feeling the sting of prices that have risen more than 30 percent in the last month.

One man from Wilmington Island called me, saying prices at his station jumped up ten cents on Thursday and then came back down on Friday. He wanted to know what was going on.

We put the question to 12th district Congressman John Barrow.  "The price you're paying for the gas that's in the ground is the price you're having to pay today in order to get the gas in the tank six months to a year from now. " 

Barrow says whether drivers want to admit or of whether we all understand it, that the price of gas and oil is driven by the futures market.  He says the problem right now is there's an incredibly tight margin between what's refined every day and what the world is now consuming on a daily basis.  "The difference is about one million barrels," he says.

Barrow says that small cushion makes everyone nervous about what they can continue to deliver, and that causes prices to flip wildly.

Two weeks ago, he wrote President Bush asking that the U.S. stop purchasing oil for the Strategic Petroleum Reserve.  He says the reserve is at 97 percent capacity now.  "The nation's emergency gas tank is full andf we don't need to keep pouring more into it until we top it off," he says. 

Barrow says by suspending purchases, there would be more oil back on the market for consumers and prices might stabilize a bit.  The amount of oil put back in the market would be about 3 million barrels, basically a drop in the bucket as far as overall demand.  However, Barrow says it could still have an impact. "People can quibble about what difference it would make but even the Department of Energy recognizes these purchases are adding to the demand," says Barrow.  And all things being equal you add to the demand on an existing supply and you're going to drive up the price."

While President Bush has not indicated he approves of the idea, Barrow says more senators are getting onboard and may taken action without the president being involved.  "Well I'm hopeful that Congress will do something before Memorial Day," he told me.  "The President won't see the light and if he won't listen to the voices of folks on both sides of the aisle in both the Senate and the House then Congress has an opportunity and an obligation to step in."

Barrow's comments may give some hope to local drivers but not to one I talked to. "We should kick all the bums out, they're the ones who let it get this way," he told me.  "You know republicans and democrats, it doesn't matter."