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Gulf oil fire shouldn't burn consumers at the pump

San Diego gas prices fell again this week, down almost a nickel since last Friday at a current average of $3.03 a gallon. We expect this trend to continue through the holiday weekend, although the fire in the Gulf panicked the oil markets yesterday and sent some local gasoline wholesalers into a spree of irrational price hikes. The hikes are irrational because the price of oil on the "MERC" or NYMEX (New York Exchange) represents the price that traders at Goldman Sachs think they can get for oil in thirty days. In other words, this isn't today's posted price for the oil that a refinery must buy to make gasoline, it is a possible price for oil in 30-days.

Sound crazy? It is. Right now the level of stored gasoline in inventory is the highest it has been in 27 years, according to the Department of Energy. That's a lot of gasoline being kept away from the market in order to prop up prices.