Five dollar gas

In a 2008 interview with the Wall Street Journal now Energy Secretary Chu said
Somehow we have to figure out how to boost the price of gasoline to the levels in Europe.
The price in Europe averages $8 per gallon
In a 2008 interview with John Harwood then Senator Obama said he would like to see the price of gas rise gradually to $4.00 per gallon. His idea is that higher gas prices will encourage consumers to use less and look toward electric cars. This of course ignores the question as to where the electricity comes from.
Gas prices hit $4.11 per gallon in July of 2008 when oil spiked to $145 per barrel. Today in the news they reported that gas was $3.57 because oil was up to $105 per barrel. Using these ratios oil should be selling at $125 per barrel so there are other forces at work.
It seems to be a mystery to all the talking heads because they do not understand the fact the gasoline is traded as commodity on the world market. In the US we currently have excess oil and gasoline. The oil excess is the result of the new production from North Dakota. The excess gasoline is because demand in the US is down due to the slow economy. Right now the US refineries are running at capacity and they are producing more gasoline that what we currently use. Many talking heads, most notably Bill O’Reilly, cannot figure out why if we have excess supply and slow demand the price is still rising. They do not understand that the price is set by the world market and China and India are buying up all the gasoline they can get and their demand is going to keep increasing. The US is currently selling the excess gasoline to these growing economies. If we didn’t sell them our excess the world supply would decrease and the world market price would rise even faster. If the US had more refineries and we could increase the world supply then perhaps the world price would come down, but it takes years to build a refinery something we haven’t done since 1976.
There has been a shortage of refinery capacity for 20 years so why haven’t more refineries been built. The answer is complex but here is one example:
One company, Arizona Clean Fuels, has been trying to construct a refinery in the Southwest since 1998. Getting a permit to build took seven years, and the company twice changed the plant's proposed location because of environmental restrictions and land disputes. The refinery is projected to have a $3.7 billion total price tag. The EIA recorded per-barrel profits of $5.29 in 2006; at that rate, the 150,000-barrel-per-day refinery would need to operate for almost 13 years before its profits outweighed the cost of building it.
Get ready for five dollar gas