What will happen to the price of gas?

Question

If the price of gas goes to like $4-5 a gallon i think alot of people will quit buying it and hte govermentment will go into banktrupcy. Why cant they make it cheap, more people would buy it and it would be the same ammount of money as a few people paying ALOT for it.

Answer 1

Oil pricing is based on the US dollar.

With the weak dollar against other currencies, consider the Mid East countries selling oil on the world market at $100, (US) per barral.

When the seller buys products in those countries, like Europe, that product is priced in Euros.  Consider the product priced at 100 Euros.

Since it now takes about $160 or more US dollars to buy that 100 Euro product, buying power has decreased.  

Thus, they raise the price of oil to recoup the buying power.

This is only an example, but oil has risen to $110.00 at present.  It may go higher if the US $ drops farther.

The same applies to tourists.  One traveling to Europe will pay more for products and services in US $.

A foreign traveler to the US, will pay less Euros in the US.

This only part of the picture, but basically the primary reasons.

Answer 2

Tim,

The only involvement the government has in the oil markets is to maintain the Strategic reserve in case of national emergency.  Outside of that, the oil markets are free, as they should be.  Gasoline always increases in the spring, due to annual maintenance at the nations refineries.  Spring is the season of choice, because the home heating season is over and the summer driving season has yet to kick in, so the refineries are actually not that busy.  Unfortunately, with the refining network at 97% capacity, taking even one refinery offline casues a negative flow of product and prices rise.  Combined with the weak dollar, expect record average prices this spring, following by a softening in June.

Oil prices are set by the global spot markets.  Futures markets anticipate prices and investors buy future production.  If the spot market is higher than what the investor paid for his futures purchase, he makes money.  If the price is lower, he loses.  Gasoline is also priced the same way, despite what others have answered.  Gasoline is purchased on the future production value and refiners and marketers purchase those or spot market offerings from investors.  The street price of gasoline closely follws spot market pricing because it's presently available gaoline and a retailer can theoretically sell it back to a marketer for a higher price.

Oil and gasoline are commodities, like gold.  The gold in your jewelry is worth more or less, depending on the gold market.  Commodities represent a hedge against inflation and weakening currency.  We are currently battling with a weakening dollar, so commodities look good to investors, especially risk-averse investors.  This is why there are tons of commercials on TV offering to buy your gold.  Gold, like oil and other commodities, is at record levels.  Gold spiked in the late 70's, when we were experiencing double digit inflation, then eased off for the late 80's and all of the 90's, to relative lows, due to low inflation and a strong dollar.

Answer 3

Unfortunately, I do believe the price of gas will go up until the government steps in and starts to use it's weight to protect it's citizens and stop the OPEC tyrants from causing massive bankruptcy nationwide.  The oil empires are smart, and they know that the only way to take down the USA is to take out the citizens.  They can't always come in and blow up buildings and shoot people up because the US would retaliate off of that.  But kill the citizen in the wallet, and the government doesn't even hear the "shot".   Until the government supports more domestic production, and by the way, thanks for killing that Speaker Pelosi, the price will go up and up though consumption is down.  And even for you global warming people panicking because your local iceberg will melt and cause less destruction than people say, the money made off of domestic fuels, say the taxes the government gets from domestic companies, can be used to fund alternative fuels and stuff like that.  It's a full circle advantage for American companies, the American government, and most importantly, the people who make the USA the USA, the citizens.  Oh yea, and domestic fuel costs less to ship, therefore decreased shipping costs.

Answer 4

Up up up.

With today's announcement of the Carlyle Fund about to collapse, look for another run on Wall Street.

We all knew it was a house of cards, yet we voted that howler monkey back in.

Answer 5

People will discover other options, such as walking, biking and public transit.  Necessity is the mother of invention.  We can and should return to a day when we were less car dependent.  I can't afford $4 - $5  a gallon gas.  Most people can't.  American auto makers will also stop foot-dragging and making excuses about fuel efficiency.  American drivers are going to have to rethink their attitudes about the necessity of having a huge trucks or SUVs, especially those who live in cities and urbanized areas.   My husband and I will definitely ride to work together since we will soon be working at the same organization.  We are thinking of selling my car and keeping just our Honda Element (okay gas mileage for an SUV and we need it in due to the heavy winter snow conditions and terrain in our area) and getting commuter bicycles to use for work in good weather.  In the end, I am ready for higher gas prices.  I have ridden the bus to work before where I used to live and can do it again.

Answer 6

wow, really

ok, the govt doesnt set the price of gas.  It is set by the big oil tycoons who determine the price of gas by the price that they pay per barrel of oil.  This is set by the countries where we get our oil, mostly the middle east and south america.

Answer 7

It will increase until someone created a way so that transportation will run on something else than gas

Answer 8

How about we all do the "no buying gas" day thing again this year!