Baltimore, MD--The latest round of "who's to blame" for the record gasoline prices has Congress fixing the crosshairs on big oil companies. Yet amid the fingers pointing in every direction we seem to miss the big picture--peak oil has descended.

There's always a ladder of blame.

We've all pulled into our local gas station and felt like pulling our hair out after glancing at the price. But instead of blaming our addiction to gasoline on the monster SUVs that eat $70 holes in our wallets every week, we blame somebody else.

I know you've done it, and so have I.

So we gripe to our politicians enough that they question whether their next election is in jeopardy. But if anybody else in our world is good at blaming the wrong person, it's politicians. At risk of having to find a new job, politicians pass the blame on down the line.

I believe the chairman of the House Judiciary Committee put it best . . .

"How did we get into this mess?"

Fortunately, they have an easy target--oil companies.

With major oil companies posting multibillion-dollar profits, our friends in Washington are suddenly pointing their fingers and insisting these companies are "gouging" the innocent gas-guzzling citizens of our country.

But, dear readers, let me show you a little picture I keep in my wallet.

We got over the feeling of being gouged at $2.27 a gallon. Don't worry, we'll get over the same feeling at $3.15.

So what have the oil companies to say for themselves?

They can shrug their shoulders and reiterate that refiners have been producing record amounts of gasoline despite refinery shutdowns and declines in gasoline imports.

This demonstrates the imbalance we are experiencing between supply and demand. Our government is confident that record high gas prices will lower demand. And the EIA has gone so far as to announce that gas prices will go nowhere near $4.00 a gallon.

Tell that to my readers in San Francisco, who have sent me their own pictures of gas pumps reading $4.55 a gallon.

And if you think we're feeling the pressure, put yourself in shoes around the world.

Iran, where low gasoline prices are considered a national right, has announced that they will be rationing gasoline next week in an attempt to curb imports and raise fuel efficiency.

Or imagine paying $7 to $8 a gallon in Europe.

Gouged? Or just catching up?

For now, we're content blaming the refineries, the politicians or even the local gas stations. We're going to keep missing the big picture until the realization dawns on us that we really aren't paying much for gasoline.

So what is the big picture?

Approximately half of those record gas prices can be attributed to crude oil. Only about twenty percent is from refining.

But doesn't the blame just fall back on the oil companies?

Absolutely not.

The truth is that oil companies don't set crude oil prices--the market does. With the huge economic growth countries like India and China are experiencing, the demand on the market rises.

But soaring demand is only half the equation. Factor in the dwindling supply of oil and we have ourselves a recipe record high prices.

Embracing Peak Oil

We can't honestly expect oil execs to stand up and announce that we are living in a world of peak oil. Global panic would set in if that were to happen.

But unlike the average Joe, cursing as he pumps he car every week, you and I are much smarter. Instead of playing the role of the innocent victim, we understand where the market is headed and milk every last cent out of higher energy prices.

In fact, the majority of my dedicated Energy and Capital readers have posted triple-digit gains solely off the effects of peak oil. If you're interested in joining us, just click here.

The latest news from China concerns one of the largest oilfield discoveries in forty years. That alone has peak oil theorists quaking in fear, right?

Next Tuesday, I'm going to show you just why China's latest discovery isn't what it appears to be. You see, this new field may not even come close to what they're claiming. But we'll get into that more next time.

Until next time,

Keith Kohl