Read about it here.

I watched The Daily Show last night, as host Jon Stewart talked with Kimberly Strassel, a Wall Street Journal senior editorial page writer.  She was on to discuss the gas prices, and the reason for it.

What Stewart wanted to know was, quite simply, why gas prices were so high.  Strassel, clearly defending the oil and gas industry, explained about how the problems in the Middle East were creating a supply problem.  That, and increased demand, were driving up prices. [SIDEBAR:  Josh Marshall snarkily writes: "It’s hard to figure why blowing up the Middle East hasn’t had the intended effect of lowering gas prices.  Weird."]

Stewart understood that; so did I.

Then Strassel went on to talk about how congressional requirements of ethanol funding was leading to high gas prices, and Stewart stopped buying it (calling it, in a good-natured way, "bullshit").

Finally, Stewart asked the question that has been bothering me.  He started off by saying that he understood the whole concept of supply and demand, but what he didn’t get was why energy companies were reporting huge PROFITS now (as opposed to income).  Why, Stewart wondered, can’t energy companies keep their profit margin constant?

His guest stammered, but didn’t really respond (Stewart graciously and self-effacingly "saved" her, by owning up to being a layman who didn’t understand these things).

So, the question remains unanswered.  And even this answer doesn’t make much sense to me.

By the way, very often you hear people say, "Well, when you adjust for inflation, the gas prices back during the crisis in the Carter era were far worse". 

NOT TRUE. 

As this graph shows, when adjusted for inflation, the price of a gallon of gas back in the Carter era was $3.00 (actually, fractions of a penny below that).  Right now, the average price is $2.96.  And it is expected to rise.