What the egg?!

On Wednesday, the wholesale price of gasoline on the New York Mercantile Exchange drooped almost 26 cents a gallon. On Thursday, the price fell a further 7 cents to $3.05.

“The bubble has been pricked,” says John Kilduff, president of Again Capital, an energy trading firm in New York. “Behind the fall was an uptick in supplies.”

On Wednesday, the Department of Energy reported a buildup in both gasoline and crude oil stockpiles. At the same time, the report showed a surge in imports from Europe where demand and prices are lower.

“We’re importing a million barrels of gasoline per day,” says Sandar Cohan, a principal at ESAI, an energy consulting firm in Wakefield, Mass. “It makes sense to put gasoline in a tanker and ship it to the US.”

This article notes that worries about flooding along the Mississippi affecting refineries have proven false—this flood has been nothing close to the havoc wrecked by Katrina.

It also points out that there is a lag between the time that wholesale prices drop and when we start to see relief at the pump.

Lately Congress has been taking to task oil companies who argue that the deserve both tax breaks and subsidies in order to remain competitive and create jobs—and that curtailing these benefits would not positively affect gas prices.

“I find it hard to understand how you can come here before this committee and the American people and say, when you are projected to make $125 billion in profits this year that somehow the loss of $2 billion a year, which means you only make $123 billion in profits, is somehow so punishing, somehow not part of shared sacrifice, somehow you need to go back at them at the pump to make up for it.” said Sen. Robert Menendez (D) of New Jersey.

While the oil industry protests, Public Citizen points out that US oil investment comes last after expenditure on dividend payments, lobbying, and marketing.

“Our research shows that since 2005, the largest five oil companies operating in the US spent nearly half a trillion dollars buying back their own stock and paying dividends to shareholders,” said the group in a statement. “This contradicts the industry’s insistence that its billions of dollars a year in tax breaks are needed to create jobs and keep gas prices affordable.”

J’accuse!