Gasoline prices have been rising. In fact, they seem to rise no matter what the actual price of oil is. Apparently, there is only one directional adjustment that can be made at the pump – and that is higher. Even with the recent drop of 12% for WTI crude , little change was seen in the average gas price. Those cost increases are starting to show through as retail sales are slowing and consumer confidence is dropping.

While the rage continues in the MENA nations, the U.S. and other countries have poured in billions of dollars as a “starter” package to get democracy underway. It is no concern that democracy is last on the list of the rebels (according to recent polls), the money is accepted without much hesitation.

Of course there is some backlash from the oil rich countries where now there is a worry that the world will provide funding to the opposition if they overthrow the current director in power. Could OPEC’s recent indecision on oil production be part of that pay-back?

Here is something that OPEC should consider: Even if there are sufficient inventories, OPEC should look at the pricing and understand that a global slowdown due to onerous gas prices will not benefit anyone.

Traders focus on the week-over-week inventory numbers as a sign of a trend. Recently there was a sharp decline and that was another reason for oil bulls to bid up prices.

But, stepping back, the total inventory levels are close to the highest level in years.

Gasoline has a similar trend on a week-over-week basis. However, it is the summer and the normal seasonal trends are normal.

So, if there is a $5 per barrel premium due to the Libyan conflict, does anyone really believe that once/if that comes to a conclusion that there will be a sharp price move to the downside?

Here is the cold hard fact: The rampant speculation in oil is back and the unrest in MENA is not helping. Come to think of it, we are getting ripe for one of those “Nigerian rebels cut a mainline” headlines to cause another leg up for oil prices higher. Of course, once that happens, President Obama will be back out talking about the potential to “tap” the strategic oil reserves. Yet, looking at the inventory data and the fact that there is no apparent problem with production, that is not going to happen.

The best thing will be to increase the speculative margins again and allow the U.S. dollar to breath for a few days. If the gang up in Washington can come to an agreement about the debt ceiling and the Fed stops pounding the dollar, oil prices should start to come down – albeit slowly. Unfortunately, neither of these two are realities…

Saudi has done their bit to increase production, now OPEC needs to step up.