What are the real reasons?

Question

Me and my sister were talking about gas prices, we're 15 and 13, and she asked me (i'm 15) why the gas prices are so high. I have ideas, but i really don't know the real reasons why the prices are so high.

Short answers are fine, but long, detailed answers are even better...of course my fav answer gets 10 points.

Thank you!!

Answer 1

well everyone needs gas. the stuff in gas are unrewnewable resources. the president has nothing to do it dont be fooled by ignorant ppl. well anyways the demand is getting higher and higher by our country and other countries. less of product and higher demand then that equals higher prices. we kno of places in the ocean that have the recources but enviromental ppl wont let us drill there. but the truth of the matter is that we america drills it leaving a very small carbon footprint and the reality is the area will be drilled if not by us then by another country. and they will do it in a way that is cheaper but ruins the oceans coral and stuff more than if we drilled it.  hope i helped.

Answer 2

http://answers.yahoo.com/question/index?...

Because bush is a dumb***

Answer 3

The most basic law of economics is the law of supply and demand. Very simply it states that the price of some good changes in relation to the supply of it and the demand for it.

Now a few examples: Let's take cherries! A good harvest, which means a big supply will lower the price. Nevertheless, there is now a counter force: with lower prices more people will decide to spend more of their income on cherries - so demand will increase until a new level of price is found. There are also some long range results: If prices are lower than costs cherry trees will get chopped down or on the other hand, if prices allow a good living for the owner of a cherry orchard he will plant more trees, by that increasing the supply.

The price of cherries will stabilize if people decide to spend some more of their income on cherries. It does not matter wether they need or want cherries. Need or wanting cannot be equated with demand. Demand in a modern economy is only demand when it is backed by the willingness to spend money for something or at least the acceptance of the responsibility to pay back the therefore occurred debt.

Now, of course, one can increase the demand for cherries if he can persuade people that cherries are good for their health or that they live longer if they drink lots of cherry brandy and that is the reason for all advertizing: Keep the demand high enough that the pressure of the law of supply and demand cannot push the price of a good below the line where producing it is not profitable anymore.

Still, if you now believe, that cherries are a necessity in your life, you might have to forego other expenses to stay in the frame of your income. If you do it, that puts more pressure on the demand side of the goods you did not buy.

Every economic decision on your part is the cause of some effect in the gigantic interrelation system of economics - and all of it is governed by the law of supply and demand. In other words: All prices are subject to the law of supply and demand, and everything has a price.

Answer 4

One reason is that oil is an international commodity and the US dollar has taken a real beating. The Canadian dollar has gone from 63 cents US to about 1 dollar 7 cents US in spite of the Canadian govt's attempts to keep their dollar lower than USA's.

This means the US dollar is only worth about half as much as it was measured against the Canadian dollar.

The situation when comparing to the Euro and Yen is even worse.

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Next, as the US dollar collapsed with the real estate markets a lot of people took their money out to invest in hard commodities instead of threatened lending institutions. Gold rose sharply but so did the spot price of oil.

This mean that the oil price got bumped by the devaluation of the dollar and by hedge funds trying to stop their losses in the mortgage markets.

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Third, oil really is in short supply and the demand is increasing for it world wide. India and China are pushing prices up by increasing the demand of a rapidly depleting resource. The threat of a general war in the oil producing zones shutting off production just makes it so much worse.

(Middle East supplies  over 1/3 of total world oil)

In the face of the chance oil production in the region might be crippled speculation on oil futures is pretty high.

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The rourth reason is that oil companies charge what they can.

At the moment they are allowed to charge very high prices, both at the wellheads and at the gas pump.

Part of the price might be to offset their losses in the financial markets (martgage loans) but a big part of it is simple old-fashioned price gouging.

Answer 5

Gas prices are high because well America is in debt, it has been and we borrow money and other things from other countries. There are less places and more rare places to get gas and get it fixed and perfect or whatever at factories and plants to make barrels of it less money, less places to get it, less gas, more rare, alot of people need it, costs more to make it costs more to buy it.

Answer 6

OH my goodness what distorted logic you people use.

If it was the value of the dollar why is the the price of oil going up in every world market?

Okay no to answer your question. There are new rapidly growing oil markets in China India and other formerly third world countries. With these new markets the demand on oil increased dramatically. Add to that the stock market speculation that the price would go up based on what i already said.

We also have a group called OPEC that sets how much oil will be sold controlling the flow. With a smaller flow the price goes up.

If the US were to dramatically increase their own oil production OpEC would be forced to sell at a more reasonable price or they would not be able to sell anything as the US oil would flood the market and ruin their monopoly.

The US could match their production for 70 years at best therefor we should also expand research into oil alternatives and begin implementing them as soon as they are viable.

Answer 7

It's all related to Scarcity  +  Supply & Demand  +  Profit motive + the value of your currency

Answer 8

It is the value of the dollar. You can see prices going up on other things also cant you?

Answer 9

There are many reasons that are causing the gas prices to be so high, but the main reason is the supply is not meeting the demand. Increased demand from China and India has in effect reduced our supply of oil. The Saudis and other oil exporters have been lacking in production, so you get the Idea. Other minor issues include frantic government policy, and the Dollar falling...those are both changeable.