Even with gasoline prices starting to come down from a price of two dollars a gallon, they are still much higher than they should be. American consumers are still angry, and the politicians blame the U.S. oil companies. Al Gore, for example, is calling for an FTC investigation. The answer to the first question is relatively simple.
Prices rise when demand exceeds supply.
But OPEC's production cutbacks are only one reason for escalating gasoline and oil prices. U.S. federal and state government policies are the worst culprit. These regulations add cost to the production that is allowed and, in other cases, prevent American production entirely. The diminished, more costly supply adds to the selling price. With three octane grades in each zone, producers must supply twelve different gasoline blends for service stations along a single 300-mile stretch of highway.