Rich Galen

The National Journal's Ron Brownstein reported last night that with Rick Santorum taking a two percentage point lead over Mitt Romney in the latest CNN poll, it marks the sixth lead change this cycle.

Like most people I have gotten so caught up in the rising and falling of GOP Presidential candidates' fortunes that I more-or-less forgot about President Obama and what else is going on in the world.

What else is going on is that gasoline prices are on the rise.

Some people are following the so-called "Doc Fix" issue - that is to forestall a 27 percent cut in Medicare reimbursements to physicians. More people understand an extension of unemployment benefits. A lot of people would recognize whether or not payroll taxes (to pay for Social Security and Medicare) were being withheld from their paycheck.

But, everyone understands rising gasoline prices at the pump. You stand there listening to the "ding" watching the numbers change at a blinding rate, trying to calculate (a) how many gallons your car will take given the indicator was just below a quarter of a tank, (b) how much that is going to cost, and (c) whether it will wipe out what little credit limit you still have on the card you swiped to begin the process.

There is no market reason for gasoline prices to be increasing. Global oil consumption is directly tied to economic activity. If you aren't manufacturing as much stuff, you don't need as much oil to make it, deliver it, or get it home.

If the world is using less oil, and oil producing countries continue to pump it and ship it, then the price of oil should be going down.

Supply. And. Demand.

The Eurozone economy is lagging. The International Monetary Fund (IMF) reported a couple of weeks ago that economic output for 2012 in Europe would shrink by about a half a percentage point this year. That spells "recession" in just about any language.

Not only that, but the IMF also predicted that a recession in Europe would have the effect of halving the rate of economic growth in China - from about 8.2 percent to 4.2 percent.

Even with the improved economic data for the US pointing to GDP growth of about two-and-a-quarter percent increased supplies are keeping prices for domestic crude nearly 15 percent below European prices.

Still, this morning, oil is selling for $101.94 per barrel (compared to $118.87 per barrel for Brent Crude - the European price).

I understand the U.S. stock market is on a roll. My 401(k) which has been underwater as much as 40 percent over the past three years is now only 15 percent behind - it is now my 341(k) plan.

So, what's the problem with oil?


Rich Galen

Rich Galen has been a press secretary to Dan Quayle and Newt Gingrich. Rich Galen currently works as a journalist and writes at Mullings.com.