So why are gas prices increasing?

According to the last report from the California Energy Commission, they shouldn't be. Right now the State is awash in gasoline supplies. The Energy Information Administration says national gasoline stockpiles are well above last year's levels. More troubling is the fact the price of gasoline is rising at a time of year when it usually reaches an all-time low for the preceding 12 months.

For years Big oil's apologists have claimed that the price of gasoline in California is directly related to the price being charged for oil on the NYMEX futures market. "It's all about supply and demand," they say."

Yet frequently, supply and demand have little to do with California's retail prices. We call this phenomena "Demand and Supply" where vendors create real or perceived artificial shortages and then demand more money for their supply, making the current jumps at the pump a text-book example of gouge-o-nomics.

Heat to Price: When there is political heat, gas prices drop.

The current trend suggests that politics and market gaming may have more of an effect on prices than the cost of oil. Long ago UCAN predicted that gasoline prices would drop dramatically before the election then surge immediately after on Tuesday, November 7, and that's exactly what happened: Gas prices jumped as soon as political heat was no longer a factor and the big investment house agree (see PDF of report from New York Global Securities) courtesy of Oil Change International.

Bottom Line: Now that the political heat is off, UCAN predicts that gas prices will not be dropping soon in San Diego. Or for that matter, in the rest of the country, which is long overdue for a crude awakening of its own.