Why are gas prices spiking?


IN FOCUS: Energy a big issue at the debate and on the campaign trail

MIKE OZANIAN: No, he is absolutely wrong; in fact he showed how clueless he was about our energy policy. Blaming the stronger economy on higher gasoline prices misses the whole point of the Reagan recovery where the economy boomed and the gas prices fell and the Clinton recovery where the gas prices fell. The president meanwhile blocked the pipeline coming down from Canada which cost us a tremendous amount of jobs. Meanwhile he keeps confiscating more taxpayer dollars to put in companies that go bankrupt like Solyndra and A123 systems.

RICK UNGAR: It's interesting because mike make some very compelling arguments. The problem is none of them have to do with the price of gasoline. You can argue if you would like that the president's energy policies could have an impact going down the road. I would tell you that you are wrong, but that's an argument we can have. The reality is we see production up, there is no disputing it, and you can give President Bush credit if you would like. None of that impacts the current price of gasoline. Talk to me in 4 years, if you don't like the prices, that would be the time to say ‘if he hadn't focused on green energy' then maybe.

ELIZABETH MACDONALD: It is going down on federal lands; production is up on non-public lands in the private sector and permaning is down 32 percent. They argument has been made that the markets set prices. I get that, yes the market sets prices. People who make that argument seem to forget that the Middle East OPEC cartel controls 40 percent of the oil supply. My point is that the president needs to focus on supply issues, and in fact during the great recession in ‘07,'08, gas was still sticking out at $3-$4 per gallon. Until George Bush lifted the moratorium of drilling in the gulf, that's when gas started plunging by 30 cents. That's when President Obama said, ‘I agree with that, I agree with that in August of '08. He said it is about supply.

BILL BALDWIN: Maybe because of the President's policies but the real question is are they going up because of his green policies? Let's focus on one big cause of driver aguish which is the ethanol mandate. The jobs created by that boondoggle are not green jobs. They are black jobs. Ethanol destroys the environment. Being an environmentalist, I'm looking for a candidate who opposes this boondoggle. I haven't found one yet.

JOHN TAMNY: That maybe so but I think that is irrelevant. I think the problem with this discussion is that we are talking about a national energy policy. We don't have to have a national shoe policy or a national policy for breakfast cereal, but we get all 3 with ease. The simple truth is that we are awash with oil around the world. The oil is expensive because the dollar is cheap and even if every OPEC nation around the world, and every oil- producing nation around the world, embargoed us we would still consume their oil as if they were bubbling up in Texas. Let's get out of national policy and just let markets work.

VICTORIA BARRET: The problem is that we are completely dependent on the Middle East for oil. President Obama is the president of the United States, not the president of OPEC. He doesn't have much control over oil prices. I have to agree with Rick on this one. His green policies may affect oil prices 5-10 years from now but right now they are simply not. It's about supply and demand, gas prices go up and down accordingly. We should reduce our dependence on the Middle East but that's another debate.

Cost of living increase for retirees one of the lowest since automatic increases began in 1975

ELIZABETH MACDONALD: The irony is 1975 is when the Federal Reserve and the government starting touting this inflation figure but knocks out food and energy prices, although the government does have loads of other inflation measures but they were trumpeting this one. Food cost in many markets across the country is rising at its highest rate since 1984. Average Americans are certainly feeling it, certainly feeling it when median household income is down. And their savings deposit rates basically nominal or microscopic.

VICTORIA BARRET: You can't avoid buying these things, and meanwhile we are certainly not seeing inflation in wages. Inflation is a complex thing. You are talking about all these inputs and we are trying to assess how the average household spends their money. The answer is in some sectors like food, we are seeing rising prices. Is it inflation? Is it complexities in the commodities market? I think we are going to see this erode especially in food because of the slowdown in Europe and slowdown in China. I'm not concerned with inflation right now. You even have some economists saying that you even have deflation so it's a complicated question but it is not clear that we have solid inflation going on right now.

JOHN TAMNY: It's not complicated at all. What's complicated is CPI. It's an artificial number that you can make low or high. Depending what you put in there you can get high inflation or low. The simple truth is if we measured CPI like we did in the ‘70s, we would have very high inflation. The way they used to measure inflation was the dollar. They would measure it in terms of gold. The dollar has dropped substantially about 1/250th of an ounce of gold in 2001. Today, 1750th. That is inflation. It is not if, it is now.

RICK UNGAR: They aren't playing with the stats. Since the 70s we have used this index so you can complain about what the index is, but I don't think you can make a case that there is some government conspiracy going on unless you are Jack Welch and rushing to your twitter account. It's not a conspiracy, it is what it is. There are prices that are going up, prices that are going down. You know what I would love for us to do? Rather than focusing on this why aren't we taking a look at the impact that the drought had on food prices and maybe you should look at what is behind that drought.

MIKE OZANIAN: I go by the wife budget index. The wife budget index for shopping in my household is going up every single week. So we could do the same amount of food shopping. I would imagine that I am not that different from many other families in this country, where incomes are falling or staying the same and the cost of buying groceries. In my house, we can't live without peanut butter. We are getting killed! That's what's happening across this country.

BILL BALDWIN: Government is not manipulating the data, it doesn't need to. I've got bad news for you seniors; your quota is not keen to the things you have to buy like peanut butter and medicine. It's keen to the general CPI that throws in the kitchen sink, the iPad, the iPhone going down in price. You seniors are already getting too much out of your social security benefits.

Watch out for the fees, taxes and charges of health care law set to go in effect January 1, 2013

VICTORIA BARRET: These taxes are real, and it's no coincidence that they plan on going into effect after the election. The tragic part is that they really hit seniors the most. You talk about who's dependent on medical devices, the tax on those companies are going to go up, they are going to pass that up to their consumers. You're going to see increase prices in medical devices. Lots of seniors are dependent on medical devices. We are also changing how much you can deduct off your taxes in medical expenses, which means you will be able to deduct less. Again, seniors get hit with that. It has to do with flexible spending accounts also tax deductions. The flexible spending accounts get hit too. These are real sneaky taxes that we don't need to see right now, especially in this fragile stage of a semi recovery.

RICK UNGAR: I'm not sure that owning 40 Applebee's in New York counts as a small business but I get the point. You know what I find when I talk to small business owners? They do express their concern, but if you push them and ask them the right questions you still find that they still don't understand this law. If you want to take that tax against medical equipment, guess what? It's not hitting seniors in the pocketbook; you might be complaining that it is hitting you in the pocketbook because Medicare is going to be picking up the bill for most of those equipment costs. 0.9 percent of the Medicare tax on people earning more than $250,000, our economy has survived much larger taxes than that.

ELIZABETH MACDONALD: 3/4 of small business owners told the National Federation of Independent businesses said yes we are not hiring because of health reform. 9/10 economists with the National Business Economist recent survey said yes the health reform is slowing down and the fiscal cliff is slowing down hiring in this country. The mandate tax is a big one. Why hire another worker if you are going to have to pay a mandate tax, face IRS probes if you are providing the proper coverage to avoid that tax and then pay accounting fees which crowd out the capital needed to create jobs.

BILL BALDWIN: I think all the knee-jerk tax haters on this panel should stop and think of something very fundamental about government finance. If the government wrecks the economy by being big, which it is doing right now, it doesn't matter whether it pays for it with a tax hike or by using your credit card.

MIKE OZANIAN: The 2.3 percent tax on medical device makers is a jobs killer. That's one of our fastest growing and highest paying industries and many companies are putting off opening new plants and putting off hiring more people. The wages paid in this industry are about 15 percent higher than the average wages in this country. It's killing the R&D in this industry and it's very bad for the economy.

INFORMER: Earnings season a bummer for lots of companies-we have the companies which will beat expectations and stocks will soar


52-WEEK HIGH: $70.75

52-WEEK LOW: $52.21

BILL BALDWIN: Chart Industries Inc. (NASDAQ: GTLS)

52-WEEK HIGH: $79.29

52-WEEK LOW: $50.67