More: Track up-to-the-minute gas price reports at milwaukeegasprices.com.

Audio:
• Newsradio 620 WTMJ's Jon Byman talks to Erin Roth, who represents big oil companies
• Newsradio 620 WTMJ's Jon Byman talks about the cost of crude oil with the Chief Economist for the American Petroleum Institute

$4.19 a gallon was enough to scare some people.  In Germantown, people lined up at the Fleet Farm at Appleton and County Line Road.  That's because the gas station there was still charging $3.93.

"My husband called me and said 'get that truck out there now!' " said one woman who got gas there Thursday morning.

Why is it so High?

Two words: Crude Oil.

The price of crude has skyrocketed in trading in recent days.  Why is it so high?  Part of the reason is that it costs more to produce.

John Felmy, Chief Economist with the American Petroleum Institute, says, "We're drilling in two miles of water, we're buying platforms that cost in excess of a billion dollars before you even get started and you have wells that cost in excess of 100-million dollars for one single well."

Erin Roth with the Wisconsin Petroleum council says he heard one story about a company that spent more than a billion dollars to drill a well that didn't produce anything.

Stories like that are the evidence that as we use more oil, it's more expensive to get to that oil.

But Felmy says he's not sure that the increase in production costs is as high as the price of crude today.  "We just don't have the data at this point."

Either way, cost of production doesn't matter entirely.  That's because as long as overall demand for oil continues to increase, businesses that produce the oil can and will charge more.  Roth points out, "these companies are in business to make a profit for their shareholders.  Those CEOs that run Exxon-Mobil, BP, ect. do everything they can to optimize their profit."

Felmy says there are people profiting on your pain at the pump.  Saudi Arabia, for example, has low production costs.  But it's still able to sell its oil for the market rate.

Felmy says there is some history here.  Speaking about whether oil producers have any incentive to help get the price down, Felmy says, "in the early '80's, they tried to have the price go up to slightly less than the levels we're at right now [adjusted for inflation] and what happened was demand dropped off sharply and they ended up having enormous troubles because of it."

But Felmy says what's different this time, even with the prices increasing as much as they have, demand doesn't seem to be dropping off.  It has in the US, off three percent this year.  But Felmy says world demand is still expected to increase by a million barrels a day this year.

House, Senate Committees Questioning Why, What Can We Do?

The $.20 rise at many gas stations happens on the same day a committee from the House of Representatives gets testimony from oil company executives on the rising cost of the commodity, something that has shot up to $133.17 per barrel in recent days.

Over the last two days, those same executives have gone before the Senate Judiciary Committee to talk about the same subject, trying to explain the rise.

"Oil as a commodity clearly has gone up," explained Peter Robertson of Chevron to senators. "But the cost of all other commodities has gone up, too."

The cost of oil, and its affect on transportation industries, is being felt by airline fliers. American Airlines is now charging its customers $15 for the first piece of luggage placed in baggage checks.

Robertson, and other leaders with the major energy companies in the United States, are asking for an ending to restrictions on oil drilling in Arctic wildlife areas and waters off the east and west coast that are closed off to drillers.

They also suggest more investment in solar and wind power.

The world's two largest oil-producing countries, Russia and Saudi Arabia, have both stated they're not expanding production. Some analysts say demand for oil worldwide might outpace supply in four years.