Gas prices continue spitting in Central Banker’s eyes

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Gas prices in the U.S. are nearing the freak-out point–the level at which Americans go from grumbling about getting gouged to actually reducing their gas consumption and demanding that their elected representatives start doing something to help.

And the Republican Presidential candidates have jumped all over that, suggesting that today’s high prices are Barack Obama and the Democrats’ fault.

Meanwhile, the Obama Administration is trying to preempt the criticism, saying that there’s “no silver bullet” that is going to knock gas prices back down to $2 a gallon.

And there is almost certainly no silver bullet that is going to do that, short of a global economic depression.

Gas prices are rising, in part, because oil prices are rising, and oil prices are rising because of steady changes in supply and demand.

With the growth of China, India, and other developing markets, the demand for oil is outstripping new supply, so there’s nowhere for prices to go but up.

Obviously, new sources of supply will help, but it’s highly unlikely that they’ll take gas prices back down to the level that most Americans consider reasonable. Even analysts who think that today’s oil and gas prices are inflated by speculation now put the “fair price” of a barrel of oil at $75-$80, as compared to $20 a barrel a decade ago.

So, who’s to blame and what should be done?

Well, one entity that is to blame is the one doing everything it can to put the blame on someone else–the U.S. government. In the 40 years since the first oil crisis, in the early 1970s, Congress has done nothing to develop a comprehensive U.S. energy policy, one that would develop not only additional sources of oil but also leverage natural gas and renewable energy.