President George W. Bush urged Congress this week to end a ban on offshore oil drilling, responding to consumer anxiety over soaring gasoline prices. Bush said opening federal lands off the U.S. coast — where oil drilling has been banned by both a presidential executive order and a congressional moratorium — could yield about 18 billion barrels of oil. That would meet current U.S. consumption for about 2 1/2 years, but it would likely take a decade or more to find the oil and produce it.

The following is a map showing the offshore areas at issue. Click here for a more detailed, high-resolution version from the U.S. Minerals Management Service, which manages the nation’s natural gas, oil and other mineral resources on the outer continental shelf.

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Just as the U.S. Department of Energy was telling the American public to brace for gasoline prices up to $4.15 cents this summer, 13 people were indicted in New Jersey on charges of stealing the increasingly pricey fuel  from the state, according to a press release on the NJ Attorney General’s website.

Twelve of the people charged with gasoline theft were New Jersey government employees, who allegedly filled up their personal vehicles at state-owned gas pumps. The degrees of theft varied wildly, from stealing 12 gallons to more than $1,000 worth gasoline, the press release said.

But with the average price of gasoline now north of $4 per gallon, the alleged gasoline thieves may have company. According to the Petroleum Marketers Association of America, “drive-off” thefts, where customers fill up and then take off without paying are on the rise.

Is it fair to scapegoat ethanol and biodiesel for record grain prices and the knock-on surge in food prices? It’s a key question for policy makers as the pressure builds to wriggle out of U.S. rules to blend 36 billion gallons of renewable fuels into the nation’s gasoline supply by 2022.

There are a slew of reasons for high food prices. China requires more calories and Chinese are eating more meat. The weak dollar, weather disruptions, government intervention and speculation in commodities have been a perfect storm for food inflation. (Food price spikes are tracked in Food and Argiculture Organization graphic on the left).

Last week a top official at the International Monetary Fund, John Lipsky, said that increased demand for biofuels accounts for 70 percent of the increase in corn prices and 40 percent of the increase in soybean prices. Still he noted that oil prices would have been higher in the absence of biofuels. Francisco Blanch a commodities researcher at Merrill Lynch told Business Week that oil prices could be at least 15 percent higher without ethanol.

U.S. farmers planted the largest corn crop since WWII last year. The 25 percent of the U.S. corn crop that goes into ethanol production is not available for food products like cooking oil, corn sweetener and tortillas. Almost half of the corn crop goes to feed livestock. But making ethanol from corn also yields a byproduct called distillers dried grain, which is used as concentrated animal feed.

A blacklash against the ethanol blacklash is building. The Renewable Fuels Association is battling negative perceptions with data it says shows rising energy costs have twice the impact of increased corn costs on food inflation. Brazil is also alarmed at the criticism since it produces almost as much ethanol as the United States from its abundant sugar cane and is eager to increase its exports. Ethanol is a crucial part of the energy mix in Brazil and is distilled and distributed to pumping stations far more efficiently and with a much greener footprint than in the United States. Brazil can vastly expand cane production without competing with food acres.

One has to wonder whether it makes sense for the United States to reduce or eliminate the U.S. 54 cent per gallon ethanol import tariff to help it meet renewable fuel targets with less impact on food and animal feed prices. Of course that would be a tough sell to American corn farmers.

Drivers are feeling the pinch from record high gasoline prices in the United States, but they should be happy they’re not buying diesel.

The price of diesel has shot up nearly 50 percent since a year ago to $4.27 a gallon, touching off a rash of minor protests by U.S. long-haul truckers in recent weeks.

By comparison, gasoline prices have risen only about 21 percent since a year ago to a relatively modest price of $3.67 a gallon on average, according to the daily price survey from the AAA.

The price of both key fuels has been tracking the soaring cost of crude — which is up sixfold since 2002 because of increasing demand from China and other developing countries.

But why would diesel rise so much faster than gasoline?

One theory is that worsening electricity supply problems in countries like China, South Africa, Chile, Argentina, and parts of the Middle East has increased demand for middle distillates like diesel for use in temporary power generators.

Whatever the cause, the increase in world demand for diesel has boosted U.S. fuel exports to their highest since 1991 and helped push U.S. distillate supplies to 3 percent below a year ago, according to the most recent data from the U.S. Energy Information Administration.

U.S. gasoline supplies, meanwhile, are running at a surplus.

Gold’s oil-buying power is at its lowest in three years. (The chart shows the price of oil rising relative to the price of gold.) Hedge funds and other traders who play the gold/oil spread could be taking profits. Otherwise, this is hard to explain, since gold is considered a leading indicator of inflation.

In the past two weeks, crude oil prices rose to a record near $120 a barrel, while the spot price of gold fell from around $950 to $870 an ounce. Today an ounce of gold buys 7.65 barrels of oil. When gold was near $1,000 an ounce earlier this year, an ounce bought more than 10 barrels of oil. Gold’s weakest point relative to oil was in 2005 around 6 barrels.

Is the underperformance signalling that inflation expectations are overblown? Perhaps the Fed knows something … it cut a key interest rate another quarter percentage point on Wednesday and said it expected inflation to moderate in coming quarters, as energy and commodity prices level out. “I am still not getting why gold is trading down here and crude is up there. So something’s gotta give,” said Jonathan Jossen, an independent floor trader on the COMEX gold floor.

Retail fuel prices in the United States have smashed the records and show no signs of reversing course — bad news for drivers heading into the summer vacation season.

The explanation is fairly easy — crude oil prices have quintupled since 2002 because of rising global demand and constraints on supply, and fuel prices have risen in turn. But there are also some eyebrow-raising oddities of note.

Among them, gasoline prices are at a record even though supplies are brimming at levels not seen since 1993. Back in 1993, a you could get a gallon of gas for 99 cents if you put a little effort into it. In fact, supplies are so high right now that oil refiners like Valero are even slowing production because they’re having a hard time making money with the cost of crude eating away at the bottom line. While the swelling inventories are of little comfort to people paying up at the pumps, it could be worse. Lower supplies would almost certainly raise gasoline prices further.

Another oddity: diesel is WAY more expensive than gasoline. This is odd because diesel has traditionally been the cheaper of the two fuels in the United States as it has been easier to produce and there has been relatively less demand for it. But recent environmental regulations slashing sulfur content in diesel alongside rising consumption of the fuel in places like Europe and Asia have changed the dynamics, pushing up the cost of production and the level of exports to overseas markets. The surge in diesel prices is not just a headache for people with diesel Volkswagens. It is a huge problem for trucking companies, major courier services, and other industries. Also, because of the close relationship between diesel and jet fuel, airlines have been taking a severe hit.

Another outwardly bizarre situation in the energy markets is the fact that OPEC — which only a few years ago said it wanted to keep oil in a range between $22 and $28 per barrel — has declined repeatedly to raise production with crude in triple-digit territory. Part of the concern, they say, is the uncertainty of future demand with the U.S. economy slowing down. Probably a reasonable worry, after the cartel got burned a decade ago in similar circumstance, raising output to head off a looming recession only to see crude prices fall to historic lows a couple of years later.

Here are two outstanding examples of the ripple effects around the world when the dollar stumbles. Oil is at a record high at $110 and gold has topped $1,000 an ounce for the first time, while the dollar has fallen below 100 yen for the first time in more than a decade. Most commodities are priced in dollars, so the weaker the greenback, the cheaper it is for holders of other currencies to buy gold and oil. Gold is also generally seen as a hedge against oil-led inflation. Gold has jumped 19 percent this year on top of a 32 percent rise in 2007.

The world’s biggest oil company and the world’s No. 7 crude exporter are trading blows in a dispute that is further eroding the U.S.-Venezuelan relationship and putting energy supply on the line.

Exxon, which was pushed out of a huge Venezuelan heavy oil project last year as part of a nationalization drive, has taken the country to court in an effort to secure compensation, winning orders freezing $12 billion in Venezuela’s assets around the world. 

In response, Venezuela has railed against Exxon’s legal “terrorism” and has stopped oil sales to the company. Venezuelan President Hugo Chavez, who has accused the Bush administration of backing a failed coup to overthrow him, has also said Exxon’s courtroom assault is part of a plan orchestrated by the Bush administration to oust him.

Big scary moves that could further cool the already frigid relationship between Washington and Caracas, which have steadily declined since Chavez first won office in 1998 despite the two nations’ close economic ties.

But for the moment, there doesn’t seem to be much real impact on the availability of oil to the market. While oil prices have rallied on the rising tensions, analysts say the effect of the fight on U.S. oil supplies and on the operations of Exxon Mobil or Venezuela’s state energy company appear almost nil.

“Venezuela doesn’t want to halt sales because Chavez needs the revenue,” said Eric Wittenauer, analyst at AG Edwards.

“It looks like Exxon Mobil can pretty much buy from others the same oil Venezuela is denying it,” said Mark Waggoner, president of Excel Futures.

By the looks of the $3-a-gallon prices at the U.S. pumps, you’d think gasoline supplies were running out. Oddly enough, they’re brimming. The latest data from the Energy Information Administration shows inventories have grown to their highest level since 1994, when a gallon of the fuel went for a buck.

Before you become outraged…

The increase in inventories IS expected to push prices lower over the winter, possibly by as much as 50 cents, experts said on Wednesday. The main reason prices are pointing lower and supplies are pointing higher is that Americans — pressured by recent high energy costs and an uncertain economy — appear to be reducing their consumption.  

There’s talk of a recession and foreclosure rates are still through the roof.

But pricey gasoline still tops the American consumer’s list of worries, according to the National Association of Convenience Stores (NACS), which released its second annual consumer survey on Monday.

About half of U.S. consumers (45%) say they’re more likely to change their spending habits due to high gasoline prices than they would for rising home energy costs (26%), rising food costs (24%), a slowdown in the economy (22%) or the mortgage and lending crisis (13%).

Most American drivers haven’t cut back on their driving yet though. Thirteen percent said they’ve already cut back, and another 50% said they’ll hit the brakes at $3.25 (a penny higher than the current record of $3.24 in May 2007)

During the last year, soaring gasoline prompted 19 percent to switch away from gas guzzler; another 19 percent said they just thought about it.

Higher gasoline prices have consumers literally pinching pennies, the survey said, with 38% willing to drive 5 minutes or more out of their way just to save 1 cent.

Will going out of the way pay off for thrify consumers? Most likely, they’ll be driving themselves into the red, losing about $1.40, says NACS.