Today's average price of $3.35 a gallon in San Diego is 29¢ higher than the price of gasoline last year, when oil cost $9 a barrel more and gasoline in San Diego cost just $3.06 on average.

According to UCAN's Gasoline Project Manager, Charles Langley, the cost of oil and the cost of gasoline have become completely disconnected.

"At today's price of $63.83 a barrel, the cost of oil in a gallon of gasoline is $1.52 a gallon. Last year, when oil cost $72 a barrel, the cost of the oil that goes into a gallon of gasoline was $1.71."

"What that means," says Langley, "is that if the cost of oil is responsible for the price of gasoline, then we should be paying 19¢ a gallon less than last year for our gasoline."*

According to Langley, the cost of gasoline today should cost no more than $2.86 a gallon.

The same formula applies to gas prices nationally: On Monday, the United States EIA (Energy Information Agency)  reported that the average cost per gallon in the USA was $2.87, up nine cents from last year.  If gasoline costs are driven by oil costs, then the correct price of gasoline nationally should actually be $2.59 a gallon.

The oil industry has given three reasons for the price spikes.

The first is that the cost of oil is unusually high, but as noted above, oil prices have decreased while gas prices have increased.

Second, they claim that demand in California has increased three to four percent. This claim is also false.

 Third, they claim that environmentalists have blocked all new refinery construction in the last 30 years.

This statement is especially sneaky. In California, the oil industry has shut down almost 2/3 of its refineries in the last 20 years in order to restrict supply. Restricting supply, otherwise known as inventory management,  is the name of the game in the oil industry. Recently ABC news actually published video of a top refiner saying it. Hank Kutchka is in charge of Premcor refining. Mr. Kutchka  was named "Refiner of the Year" by the gasoline industry on March 10 of 2005.  This is what he said:

"When you take a look at where the supply demand
balance sits worldwide, you certainly come to the conclusion
that we're now finally in a situation where we don't have
a lot of extra supply ... If we go in and we start expanding like
crazy before the demand gets there, that's the shoot yourself
in the foot theory and we'll all be the opposite of geniuses."

Kutchka's comments resulted in Senator Barbara Boxer demanding an immediate investigation by the Federal Trade Commission.

It is worth noting that the chairwoman of the of the Federal Trade Commission, Deborah Platt Majoras, was appointed by President Bush. She used to work for the chief counsel to Chevron Oil.

* There are 42 gallons in a barrel of oil. Traditionally, economists and oil industry experts calculate a yield of 42 gallons of gasoline per 42-gallon barrel.