The high price of gasoline
May 25, 2007
What are your thoughts on the reason that gasoline prices are near $3.50 per gallon? What should be done about it?
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May 25, 2007 at 8:06 pm
Alright! I have had with whiners! I hear people whining about the price of gas. Yes, the price has gone up. It is still cheaper in America than it is over seas. Did you truly wonder why gas was so expensive? If you are like most American’s probably not. You are more than likely to believe that “Big Oil” is jacking up the price to put more in there pockets! Buzz! Incorrect! Want to guess again! The truth is basic economics. Supply and demand 101. If the supply is low and the demand is high then the price goes up. If there is a lot of supply and/or demand is low, then the price decreases!
Alright, the demand is high and supply is low. Why is the supply low? Want guess again? Well, lets save time and will tell you. Most of our oil is bought from over seas; see the Middle East for example. OPEC determines how many barrels of oil the countries belong to OPEC will produce daily. That affects the price, that supply and demand thing again. How can we lower the price of oil? We can drill for oil in our country and off our shores. There is a huge amount of oil to be found in the Gulf of Mexico! There are even more huge deposit in the western United States. Let’s not forget the oil that is under the Anware region in Alaska! Now why don’t we drill there? The answer is because of tree huggers! Oh, did I offend some of you? Tough! Grow up and give over it! Drilling for oil in these regions will not damage the environment or harm wild life in the long wrong. Is the drilling for oil perfect? Will there not be ANY accidents that may cause some harm on the short-term basis to the eco system? Obviously now can say that and if they claimed that they would be misleading you. Could there be accidents? Yes. Are the chances high? Absolutely not! This would decrease our demand for foreign oil and decrease the price. I know what about alterative fuel sources? I am all for them as long as they are practicable and affordable. Right not there is not a lot of choice that meet that requirement. Well, there is on for electrical power. NUCLEAR power! Oh, no I just gave some tree hugging Libs a heart attack!
Back to lower the price of gas. It may surprise some of you that gasoline starts as crude oil. To turn crude oil into gas it needs to go to a refinery. The few plants there are old. Since they are old the maintenance on them is expensive. So, if it is expensive to maintain these refineries who pays the cost? Ding, Ding, Ding! Correct! We the consumer do! Well, why not build more refineries? Ding, Ding, Ding! Correct again. The tree huggers and other environmental wackos (thanks for the term Godfather)! The environmentalists have pushed for such stringent restrictions on environmental standards for the refining process, that “Big Oil” cannot build new refineries! Did you know there as not been a new refinery built in the United States in over 30 years!
That is why gas is so expensive!
May 25, 2007 at 8:33 pm
Right wing conspiracy? Seems to me our government, since Jimmy Carter, has failed to take meaningful steps to reduce our dependence on foreign oil. Less refineries with increasing demand has been a recipe for disaster. If we can’t be coaxed with incentives to reduce consumption, perhaps the big stick of higher prices will eventually do the job. Too bad our economy will have to suffer from something that could have and should have been addressed decades ago!
May 25, 2007 at 9:48 pm
Impeach Bush
May 25, 2007 at 10:36 pm
Short Term: Nothing! These is nothing / no role for the government in this free market problem. Supply is down(due to refineries being offline for changeover etc) / Demand is up, simple economics take over.
Medium Term: 1) Relax enviromental controls to allow any refineries that are off-line due to environmental controls to come back on-line.
2) EPA should clean up it’s act, to reduce the number of blends required for gasoline for all the different regions. Reduce them to about 4! (from the current. I beleive, of over 30)
3) Change the tax code to incentivize the construction of more refineries.
4) Change any rules / regs to allow more drilling in the US (Ie Anwar, shale oil etc.)
5) Enact legistation to enable off-shore drilling for oil and to prevent states from blocking it, except on their land!
Long term: Incentivize the production of more gas and more gas products.
All terms: STAY AWAY FROM THROWING MONEY AT ETHANOL!
May 25, 2007 at 11:03 pm
Cut the taxes on gas and stop funding Democrat’s programs with the remaining taxes.
May 26, 2007 at 12:58 am
Just say no to Big Environmental and tap our own oil resorces in Anwar, off the coast of Florida, and in the Rockies. Also, build more refineries.
May 26, 2007 at 1:19 am
With 18 years experience in the energy industry, I can offer a bit of insight on this topic.
In the past, the price per barrel of oil has been much higher than it is today. Yet, the price at the pump was much, much lower. How can this be? Simple.
If people want someone to blame, they should look in the mirror. Voters have permitted the “whacko” environmentalists to control too much. We have shut off our American sources of oil, and oil exploration from offshore California, Louisiana, and Florida. We have also failed to bring in the new oil from ANWR, which may prove to be the biggest source of oil ever found. Plus, ANWR is located in a desolate tundra area, and not in those beautiful wildlife pictures being circulated.
Our refineries are operating 24/7 nonstop. If you really want to see the price shoot up, just wait until one of those refineries shuts down operations from mechanical aging or terrorism. Under current EPA rules, it takes no less than 15 years to build a new refinery, and who’s willing to take that kind of long term risk, while the nation keeps trying to reduce its use of oil?
In the meantime, every State, without exception, has raised taxes repeatedly on every level of oil-to-gas production and delivery. All of which gets passed on the ultimate consumer…us.
The energy industry as a target is misdirected. We should be educating voters and screaming at our elected officials to open up both ANWR and our offshore exploration. That way we wouldn’t be totally subject to the whims of OPEC nation dictators.
May 26, 2007 at 4:36 am
I USE TO BELIEVE IT WAS SUPPLY AND DEMAND BUT NO MORE EXUSES….IT’S PLAIN HIGHWAY ROBBERY. WE JUST GOT BACK FROM VACCATION AND OUCH!! IT REALLY HURT US MONEY WISE. WILL IT STOP US FROM TAKING MORE VACCATIONS? NO. BUT WE HAVE REALLY CUT BACK ON DRIVING TO PLACES TO EAT AND SHOP AND EVERY DAY LIVING. WE PRETTY MUCH STICK TO OUR OWN COMMUNITY. CAR POOLING HELPS WITH THE KIDS. ONE THING I WOULD NEVER DO IS BLAME OUR PRESIDENT THOUGH.
May 26, 2007 at 4:59 am
Nothing should be, “done about it.”
(There are still a few free-market Republican out here…)
May 26, 2007 at 12:58 pm
I agree with Jeff regarding the free markets, however, use the current flap over gas prices to cut back the taxes levied to slow down the growth of “social programs”
May 26, 2007 at 1:50 pm
Why don’t we put the illegal immigrants to work by employing them to do all the big oil jobs (explore, drill, refine & distribute our own resources)that Americans just won’t do anymore!
May 26, 2007 at 6:01 pm
The solution to gas prices is quite simple: Ignore the environmental whackos while building scores of refineries, and drilling for oil in ANWR as well as off the Florida and California coasts. With the volume of oil that would be available the elementary laws of supply and demand would regulate the price of gasoline in no time.
May 26, 2007 at 10:03 pm
The operative questions are: Why are gas prices so high and what should be done about it?
Gas prices are so high, naturally, because gas companies are greedy and want excessive profits. What else? I am only kidding, of course, as there are several reasons aside from greed that have driven our gas bills up to $40 or so each time we stop.
First is the cost of production. It costs the gas companies money to buy the barrel of oil, have it shipped, refined, and then delivered to your corner filling station. That is where the largest portion of your gas bill originates.
Second, and probably most important, is supply and demand. Even as prices rise, we as Americans, by and large, do not change our driving habits. We whine about gas prices but we don’t stop driving. Then, the two largest nations in the world—China and India—have billion-plus populations that are driving at exponentially increasing rates. Thus, they are demanding a larger share of the world oil supply. When people want more of something, the price usually climbs.
Third is government. Governments of all stripes tax gasoline at alarming rates. They also place requirements on gasoline blends and restrictions on drilling and refining domestically, the latter causing us to import more of our oil and gasoline than we would otherwise.
When all is said and done, there are two profiteers: the gas companies and government. Gas companies receive a rather small portion of each dollar as profit, perhaps a nickel, when we subtract what they have to pay in production costs (materials, labor, and transportation). Meanwhile, government, which produces no gasoline and pays no production costs, earns the largest portion of profit in the form of taxes.
Now let us answer the second question: What should be done about it? Here the assumption seems to be—but may not be—that government must and should do something about it. I challenge the wisdom of assuming a governmental role with one exception. Based on the premise that Uncle Sam and the State of Ohio must act, here is what they should and must do: cut taxes on gasoline, especially if we are concerned with immediacy. Doing so would take a larger chunk out of our bills than any other idea, even the bad ones like taxing “windfall profits.”
After that, governments should deregulate and allow for domestic drilling and refining, which wouldn’t cause an immediate change but would help in the long-term. Last but not least, government should create incentives for exploring new forms of energy. And one more note: Congress should not—I repeat, not—sue OPEC, especially when it, as a body, could ease the burden now via tax cuts.
Until then, however, prices will remain higher than we would like. I suggest that angry Americans take up the issue with their taxing authorities immediately.
May 29, 2007 at 4:33 pm
Every time I go to the gas station I put $20.00 worth into my vehicle. What is everyone talking about. The cost for me has not changed in years.
May 29, 2007 at 7:05 pm
A Gross thought:
If you want more of something, reward it. If you want less of something, tax it.
If you want to decrease demand for gasoline, raise taxes, don’t lower them.
If you want to increase the supply of gasoline, lower the taxes on the oil companies. Lower restrictions on exploration, procuction, and refining.
Yes, I’m for lower taxes in the long term, but the fastest way to get U S consumers to reduce consumption of gasoine is to raise taxes, not lower them. In conjunction with raising taxes, provide tax credits for the purchase of high mpg vehicles.
Reward the action wanted, penalize the action not wanted.