Can someone explain why?

Question

despite all the going green efforts and alternative energy, gas prices continue to rise?

Answer 1

they are actually going down

Answer 2

they are going down right now but the gas companies are greedy they don't care about going green.  And there isn't a car out yet that doesn't use gas and gas is not the easiest thing to get your hands on.

Answer 3

We need to dye gas green. Then the price will drop back to 1971 prices.

Answer 4

Actually due to the decrease in damand the gas prices have fallen. Americans shifted to more fuel efficient vehicles, used more public transportation, flew less and decreased unnecessary driving. These things reduced demand and help bring the prices down slightly. If we keep conserving it will go down more, but not likely to go too far down. The longterm affect will likely be prices going up at a slower rate.

Answer 5

1)  Alternative energy is very expensive even compared to current petroleum prices.  But like everything else, as it grows, the equipment costs will fall.  California is offering tax credits to homeowners to install solar or wind generating equipment.

2) As all the current projects come on-line, alternative energy will still provide less than 10% of our current energy usage.

3) China and India are using more and more petroleum as their economies (and middle classes) grow.  This is putting more global pressure on oil supplies.  We may have reached the point where we can no longer discover oil to replace what we're using, so everyone is dipping into reserves to meet current demand.  As these reserves are drawn down, the price of oil will climb.  Assuming of course that no new oil fields are discovered.

Answer 6

The extent to which we have "Gone Green" is actually quite small; year-over-year miles driven in the U.S. have only gone down by 3% or so, depending on where the data comes from (year-over-year means July 2007 compared to July 2008, which helps to get rid of some of the seasonal variations that affect driving).

"Alternative Energy" actually has very little effect on gas prices, because most alternatives that we use are for electricity production.  A small portion of the oil that is used in this country is used to produce electricity (according to this site: http://www.getenergyactive.org/fuel/inde... 1.6% of our electricity comes from Fuel Oil; everything else is non-oil related).  

Oil and gas futures are traded on international markets, and the oil market itself is worldwide.  Events in foreign nations can cause prices to rise or fall: the threat of military conflict with Iran would make prices rise as traders and oil producers started to think that oil supply would fall; news that the Chinese economy has slowed would cause prices to rise as traders and oil producers expected demand for oil to fall.

Even seemingly unrelated issues can have huge impacts on oil and gas prices.  For example, when the Dollar weakens, goods that we import become more expensive (in Dollar terms).  We import 70% of our oil, so a weak Dollar will cause oil prices (and gas prices) to rise.  This can actually turn into a self-perpetuating cycle: as a weak Dollar causes oil prices to rise, our current account deficit (sometimes called the "Trade Gap") will grow, which typically results in an even weaker Dollar, which will cause oil prices to rise - so on and so on.  

Part of the reason for the Dollar's current weakness is that interest rates in the U.S. are very low.  If the Federal Reserve started to raise the target interest rate, and other interest rates throughout the economy started to rise as a result, more overseas investors would want to buy Dollars so that they could invest their money here at a higher interest rate, which would cause the Dollar to strengthen.  This strengthening would play a role in reducing oil and gas prices.  

At the blog www.oneofusiswrong.com, oil and gas prices are discussed a lot, partly because one of the writers is actually a trader in the energy market (he trades the "spread" between oil and gas prices, which is basically the difference between how much a barrel of oil and how much a barrel of gas costs).  Some of what I have said here, and many other issues (both related to gas and other topics), are addressed there.

Basically, it's important to remember that a ton of factors come into play in determining gas prices.  By trying to "go green" and reduce our gas usage we may be able to make an impact on prices, over the long term, but a lot more needs to be done to have a lasting impact.  In 1981 gas prices reached a peak not seen again until recently, but by the 90s people had forgotten about the higher prices and had started buying huge trucks and SUVs (this issue is addressed here: http://www.oneofusiswrong.com/index.php?...  For changes to matter, they need to last.