In a recent posting, we explained several major reasons gas, diesel, heating oil and other petro prices have been so low in the US relative to many other economies, major and minor. Another one which we should have mentioned: price controls. These controls have become so forgettable because they've been so lax. Big Oil has had their own proven methods of dancing around whatever price controls existed on their lifeblood between the end of WWII and the 1970s; these controls were just another obstacle to be overcome (with cover stories concocted to explain them away) until the price for petro guaranteed that even with lower prices than Europe and Asia, the US remained Big Oil's most dependable and most prolific money-maker. And when it comes to fuel taxes, Big Oil lobbyists have been a major reason both federal and state petro taxes have remained relatively stable for decades.
One of Big Oil's favorite excuses for rising prices? Not enough refinery capability. We often hear that "the oil industry has not built a new refinery in the US in over 30 years," and not only is that true, but this "non-building program" has allowed Big Oil to control the price of gas, diesel, heating oil and other petro products in the US. Big Oil becomes a little like your passive-aggressive mother-in-law; "We can't refine oil fast enough to sate demand for gas and diesel, so we can't be responsible for what happens to prices at the corner gas station!" And arguing with Big Oil brings about the same results as fighting with your mom-in-law.
When Big Oil is troubled by: Refinery capacity catching-up with the nation's oil supply and all 
those pipelines and supertankers bringing ever more of it? Too much gasoline in your stations' underground tanks? Prices falling at the corner gas station, and Price Wars breaking out between station owners? A drop in heating oil in the futures market? Americans driving less, staying away from hi-test if they can, they're buying more and more hybrids and high-mileage cars, and only businesses buying full-sized trucks, like the olds day?
The answer is easy for Big Oil, even in the face of those (pretty casual) price controls: Cut production!
Many people might be surprised to find out that in the US, under Democratic and Republican administrations, one side called "socialist" and the other in love with "market forces," there have been price controls on oil in the US since the end of WWII.
The US petroleum industry's price has been mostly regulated through production (for instance, those mysterious "refinery repairs" which seem to always happen just before "summer driving season") or price controls throughout much of the twentieth century.
In the post World War II era, US oil prices averaged $24.98 per barrel adjusted for inflation to 2007 dollars. In the absence of price controls the US price would have tracked the world price averaging $27; however, without the heavy taxes imposed on gas and diesel in most of Europe and much of Asia, America's petro prices would still have been much below those in most of the northern hemisphere's heavily-industrialized nations.
Click below for more on Big Oil controlling petro product prices.
(Photo - Woman "gassing up" in the morning, using Honda's proprietary technology which allows it to be small enough to hang on the wall, and it's seen to the woman's left, which allows natural gas, the same product which comes into almost every building in the world, to be pumped under pressure into any vehicle which uses nat gas as a fuel).
And as we've noted in earlier postings, the people in those countries who pay very high fuel taxes get back many tangible societal benefits, such as free medical care and clean, modern, swift mass transit, which we haven't enjoyed in the US. In fact, federal fuel taxes, which are, at minimum, supposed to pay for the upkeep and growth of the country's Interstate Highway System, have not done even that for tax-paying US citizens. Over the same post war period the median for the domestic and the adjusted world price of crude oil was $19 in 2007 prices. That means that only fifty percent of the time from 1947 to 2007 have oil prices exceeded $19 per barrel.
As we've also posted recently, OPEC/Big Oil's petro pricing has been based on the US dollar, and the dollar's tremendous slide in value is just another reason, out of the control of the average American, that fuel prices have skyrocketed. Every four years the US citizen gets one, just one chance to force Big Oil to answer to the American people and the world. Perhaps, but I wouldn't bet on it, Americans have finally realized that putting two oil industry employees in the White House for eight years wasn't such a good idea. And as far as Scott McClellan: You go, boy! (Photo - Honda also developed this sophisticated unit which separates hydrogen from the nat gas which is so widely available worldwide; "the box" gotten a lot smaller, now small enough to easily fit almost any garage).
Until the March, 2000 adoption of a $22 to $28 price limit for an OPEC-sold barrel of crude, oil prices only 
exceeded $24 per barrel in the US in response to war or conflict in the Middle East. Since Israel hasn't been in a major local war for some time, the US government has stepped-in and guaranteed, a large and growing conflagration in the Middle East since 2003 (remember, "Mission Accomplished" on May 2, 2003?). This made, among other Big Oil actions, those refinery repairs due to cleaning accidents, fires, explosions or even no easily understandable reason at all even more important to the oil industry.
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