he hard done by US consumer, in what is quickly becoming an election issue, is hopping mad about the rising price of gasoline. According to the most recent AAA national survey, US motorists are paying $2.04 a gallon for premium unleaded gasoline. At $2.32, the highest petrol prices in the US are in California, where state taxes on gasoline are also highest. Among the lowest at around $1.90 a gallon are the Gulf Coast States, but you know what they say about Texas. Were it so simple as a choice on where to live, I would be happy to pay the California premium, but there are also vast web sites for those inclined to shop around for the cheapest gasoline. One could, for example, fill up at the QuikTrip on 17th and Broadway in Omaha, Nebraska for a mere $1.85 a gallon.

By comparison, a gallon of gasoline in the UK and Europe now costs the equivalent of about $5.65 and $4.60 respectively.

One petrol station in the swanky London borough of Chelsea was charging as much as $7.75 on Wednesday.

Chelsea is also home to the most expensive payroll for a football club in the country and I suspect that might have something to do with that.

Granted, UK and European governments also heavily tax fuel, as much as 75%, but consider that across the Pacific in Japan, the world's second largest economy, it will still cost about $3.75 a gallon to fill up at the pump today.

Life for the motoring public is better in Russia and China where it costs about $1.50 a gallon to fill up, but they have lots of oil.

No real football clubs to speak of either.

Not too surprisingly, one of the cheapest places in terms of state subsidised gasoline was Venezuela, where it will cost 14 cents a gallon, but then one would have to worry about the policies of its ham fisted President, Hugo Chavez and his cronies.

After quite a bit of digging ? no one seemed to know offhand for some reason ? I found out that a gallon of gasoline costs $5.52 here in sunny Bermuda.

It might be a good idea to let our consuming public know that, if only to dissuade some people from driving into town and thereby help avoid the smog that is clearly visible looking up Church Street in Hamilton on those still, hot summer days.

Anyway, the price of gasoline in the United States is serious business and recent surveys show that consumers tend to blame the oil industry for the rise in prices.

My liberal leanings have led me to view the giant oil conglomerates with deep suspicion.

There are hundreds of documented examples of abuse and greed, but taking that populist tack on its own does little to help explain what is going on in the oil markets. On an inflation adjusted basis, oil is actually cheaper than it was when it spiked in 1990 during the last troubles with Iraq, a country which sits on one of the world's biggest accessible reserves.

In real terms, in other words prices adjusted for inflation, the price of gasoline is actually lower by more than 30%.

In fact, going back as far as 1980, if the price of oil had kept up with inflation using the CPI less energy, it would be trading around $90 a barrel today

The legacy of the rough shod Western policies and sordid under hand dealings of the past have played a role in the instability of the Middle East.

No one likes uncertainty, but the region has always been a hot bed of various ethnic and religious issues, which now compounds the fact that global demand for oil is increasing, particularly from the emerging economies like China and India.

Even if the problems in the region were to suddenly go away, the question now is whether there is enough capacity in the industry itself to get the oil out of the ground quick enough to meet demand.

It is no longer simply a question of there actually being enough oil.

These are some of the realities the market is dealing with. Speculators are of course taking advantage of these inefficiencies and the market's nervousness. That however is just a reality of capitalism, which in theory anyway, is good in the long run because it forces the market to become more efficient.

That is hardly comforting in the short term after oil traded at a 21 year high of $42.45 on Wednesday before falling back below $40.00 ahead of OPEC's meeting on Thursday.

Furthermore, the trend still suggests that oil could climb towards $50 and perhaps higher, despite the large long positions already in the market.

At the very least it is going to volatile as we have seen already. Don't forget to fill up at the pump on your way home tonight.