Why are gas prices so high?

Lou Dobbs explains why the prices at the pump are skyrocketing


This is a RUSH transcript from "The O'Reilly Factor," February 17, 2012. This copy may not be in its final form and may be updated.

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O'REILLY: Thanks for staying with us. I'm Bill O'Reilly.

In the "Lou's the Boss" segment tonight, gas prices hurting working Americans big time. Since President Obama took office in 2009, the price of a gallon of regular gas, up 92 percent. And just in the past month, gas prices have risen more than 4 percent.

Here now, FOX business anchor Lou Dobbs.

This is what I don't get. Very warm winter here in the northeast and most other parts of the country. Very warm. Not a lot of home heating oil being used. So you figure in America a lot of oil reserves going way, way, way, way up. We have a lot of oil. But no gas prices.

LOU DOBBS, FOX NEWS BUSINESS ANCHOR: That supply and demand thing. This year it's not working. And the reason is demand for gasoline is down. Demand for heating oil is down.

O'REILLY: So it's even driving gasoline?

DOBBS: Correct.

O'REILLY: So our demand is down but our supply must be up, right?

DOBBS: Well, if we were just in a domestic market, but here goes globalization again.

O'REILLY: Let's stay in the United States. We have all of this oil brought in here in anticipation of a cold winter.

DOBBS: That's right.

O'REILLY: But we don't use it, so it's here. It's here.

DOBBS: Well, now, see this is where I've got to take you out of here. And stay with me.

O'REILLY: Not here?

DOBBS: Not here.

O'REILLY: But it got refined here.

DOBBS: It got refined here.

O'REILLY: And then where did it go?

DOBBS: It got exported. And by the way, these fuels are now our No. 1 export. No. 1 export.

O'REILLY: So they brought the oil in here.

DOBBS: Refined it.

O'REILLY: They refined it, and they sent it out to where?

DOBBS: Jet fuel, primarily to Asia, to China. Primarily jet fuels, diesel and gasoline, which normally would be in abundance right now is being shipped overseas.

O'REILLY: So the oil companies are making all their money now but still had to allot a certain amount of oil for the United States domestic use. Hasn't been used.

DOBBS: Hasn't been used. Because demand fell.

O'REILLY: Right.

DOBBS: And that oil, that -- and those derivative fuels were exported. And that's what no one is talking about.

O'REILLY: They figured out it wasn't going to be a cold winter.

DOBBS: These oil companies are not as dumb as the folks in Washington.

O'REILLY: Why? And you correct me if I'm wrong. That the oil companies told the refineries to stop refining.

DOBBS: No, they told them to start refining.

O'REILLY: That's not true?

DOBBS: It's absolutely not true.

O'REILLY: They didn't slow the refining down?

DOBBS: There are all sorts of myths around this.

O'REILLY: All right. Go.

DOBBS: The fact is we're exporting it and it's good news.

O'REILLY: So they're exporting, but why are the gas prices going up at the pump?

DOBBS: Because they are pushing the margins, and it's that simple.

O'REILLY: I don't understand that. The margins, what does that mean?

DOBBS: What that means is they are managing to export fuel and what is left is going up in price.

O'REILLY: Yes. Yes. Why?

DOBBS: Because there is sufficient demand for what is left.

O'REILLY: So they're -- by exporting the fuel to China and other countries...

DOBBS: Right.

O'REILLY: ... they're not leaving enough here?

DOBBS: Correct.

O'REILLY: So that...

DOBBS: And it's worse than just the gasoline, though.


DOBBS: It's also home heating oil.

O'REILLY: Right.

DOBBS: Ten percent decline in demand for home heating oil because of the warm winter you mentioned. But again, these fuels are now being shipped -- exported overseas.

O'REILLY: Shouldn't the government then say to the oil companies you can't interfere with them? Because it looks like we're getting hosed, the American worker. The American worker's pay check didn't go up 92 percent, Dobbs. OK? But the price of gasoline did.

DOBBS: You don't have to tell me.

O'REILLY: And you're telling me the reason the price of gasoline went up is because the oil companies can make more money overseas, so they're saying to the Americans, "Blank you. We're not going to give you the oil. We'll make more over there."

DOBBS: It is -- it is the same principle by which we are buying cheaper goods at Wal-Mart. We're now part of a world market, like it or not. And the fact of the matter is we are competing with demand in China, in Europe, and primarily in Latin America.

O'REILLY: So no matter what we do, no matter how much we conserve, no matter how many cars get better mileage, the prices are going to continue to go up, because they're selling all the stuff over there.

DOBBS: You've noticed that you haven't heard President Obama crying about the higher prices.

O'REILLY: Not a word. Not a word.

DOBBS: And that's because this fits into his green philosophy.

O'REILLY: Yes, he wants people to get so fed up that they go for the electric cars and all of that.

DOBBS: They may get so fed up that they show up in November.

O'REILLY: But I think you understand how angry voters are that they have to bear the brunt of these prices...

DOBBS: Absolutely.

O'REILLY: ... when it isn't supply and demand anymore, because China is eating up the oil and we're paying for that.

DOBBS: Well, and then you throw into the equation the Keystone XL Pipeline, because part of the refining process was it's got to be...

O'REILLY: That was a mistake by the Obama -- but say they said OK, you can have the pipeline, and all the oil comes in from Canada. Then they refine it in Louisiana and they send it to Beijing.

DOBBS: Not all of it. Not all of it.

O'REILLY: That's the same thing. We've got plenty of oil here. We're getting hosed. It's not supply and demand.

DOBBS: It's not supply and domestic demand. It's world demand. It's a world market, and this is the price we're paying. And that's huge.

O'REILLY: That is huge. I think the government has got to do something: step in and say, "You have to allot a certain amount."

DOBBS: And you've got more faith in this government than I do, because everything they're stepping into they're stepping in.

O'REILLY: If that's true then, then there's going to be any regulation about oil prices. It could go to 10 or $12 a gallon.

DOBBS: How about this? How about we start exporting -- excuse me, exploiting and producing the energy reserves we've got. That's a very simple concept. We don't need a government to do that.

O'REILLY: In theory, if we did that, they'd still send it over there. It's a billion and a half people needing oil over there. So you know, this is bothering me. This is bothering me, because oil is a monopoly.

DOBBS: Bill O'Reilly is stepping up with the government? No.

O'REILLY: I think the folks are getting hosed and somebody has got to watch out for them.

DOBBS: I think you're exactly right.

O'REILLY: I've got to go. And we were going to do a Solyndra thing, but the government did not subpoena the White House people said they're going they're going to go voluntarily to talk about Solyndra. When that happens, Dobbs and I will talk about it.

DOBBS: I talked with the folks close to the investigation on Congress. They are -- they are pleased with where this is right now, so that means a good thing.

O'REILLY: Whatever happens we'll update you. Lou Dobbs, everybody.

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