Could gas prices be low and everyone benefit?

Question

The way it is now gas prices are outrageous! Because of the high cost of fuel many people have resorted to walking and bike riding (weather permitting, of course). I'm one of these people. The oil companies are making a killing right now anyway. Do you think it's possible for gas prices to be lowered to about $2/gallon for example and everyone still benifit. My thinking is that with gas prices so high now people are buying much less gas than before. If gas prices were lowered to the possible $2/gal. people would be very willing to travel more therefore buying much more gas and the oil companies would still make close to the same in profit.

Answer 1

Nope, it wouldn't work that way.  First of all, there isn't enough gas for them to lower the price.  They could crank up production, but not enough to lower the price significantly.  Furthermore, they probably make more profit this way, so they have no reason to.

Answer 2

There is very little profit in a gallon of gas.  We are talking a few pennies per gallon.  An unbranded station (a company that does not own the refineries) has to purchase the gas already in a refined state, and currently may actually LOSE money on gas.

The following webpage shows how the costs of a gallon can be broken down.  All the costs add up to the retail price on the bottom row of the chart.

http://www.energy.ca.gov/gasoline/margin...

Reminds me of an old Aggie joke where a farmer can't figure out how to make money selling watermelons out of the back of his truck.   He's buying them for a buck, and selling them for a buck.  He finally asks his friends at Texas A&M to do some research on the subject....after many months, they come back with the solution:  "You need to buy a bigger truck."

Answer 3

there has been reports that the gas price will be at $5.00. per gallon by next month. there has to be a limit. this is ridiculus. I remeber when gas was just $1.09. in our areal it is $3.99per gallon. we seem to do o.k at $2.oo before why not revisit that low price again?. hey I'm all for it. people with these big gas guzzler suv's are in trouble. and this could not have come at a worse time. homes in foreclosures, large compainies closing their doors and laying off workers not just auto manufactuers but other companies that have a large number of employees. and weather related calamities all add up to high prices and low wages. where will it end.

Answer 4

There is no limit.  America built our society around $1/gal. gas, and that turned out to be a mistake. Gas isn't going to stop going up just because it's inconvenient for us.  

Gas prices are high for a REASON.  That reason is much, much bigger than oil company profits.   It's called "The law of supply and demand" and it's a basic economic principle.  

I don't know if they still teach economics in high school, but you can get an education on eBay instead.  Why do scarce things like Nintendo WII's being bid up way above their "retail" value?  Because demand is high and supply is low.

Why do Superbowl tickets get scalped for many times their face value?  Because some people will pay "Whatever" for it.  (and realistically it's a small part of the total cost of going to the Superbowl, what with flights, hotels, rental car, food etc.)

Our economy may be weak (because of gas, duh!) but the world economy is quite strong.  China and India are finally lifting themselves out of poverty and now hundreds of millions of them can afford their own cars.  So they're bidding up the price of gas, and so the price is going up.  

You are paying it because like the hardcore gamer or football fan, you'll pay "anything" to get it.  

So you want that law of economics to go away.  You and Karl Marx.  Ask your teachers about that name!

As for getting Americans to give up their gluttonous lifestyle, that's a neat idea but I don't think it'll work.  If it's cheap and Americans like it, they'll do it.  That's just who we are as a people.  Selfless social conscience won't work by itself.  Green also has to appeal to American greed or ego.

The good news is, the more gas goes up, the more alternatives make sense (biodiesel, commuter trains, moving near your employer).  But those alternatives take a LONG time to create, and if gas goes back down before they're finished, they tend to be abandoned.  This has happened over and over with every oil crisis.  We never stick to plans.  However this one is different, China and India won't stop growing their economy.  I think $5 gas is with us for the long run.  It may temporarily drop to $3, but it'll go back up.

Answer 5

of course there is a way. its NOT going to happen though. thats just not the way greed works. part of the problem is that most people havent been buying less gas.

Answer 6

Instead of having 4.00 per gallon on gas that goes strait to the oil companies, there could be a 2.00 gas tax and a 2.00 price. That way the oil companies don't get too much and the other two dollars go back to US.

Gas prices are so high because Americans are addicted to oil. Most Americans will pay a lot to fill up their hummer.

Answer 7

NO! We need to learn to economize as the amount of gas left in the earth is limited & will run out someday. We need to stop driving with only 1 person in a a gas hog.

Answer 8

Not really.

Last year, Chevron made $5B in 1Q profits. THis year, they made $7.2B in profits. Thats $2.2B more than last year - you think they are going to give up $2B in PROFIT to make your life easier?? They didnt make record profits in 2007 by caring about the public's plight, and they certainly arent making even higher record profits this year by caring about you and I...