Question:

Why exactly are the gas prices so high? Same with oil?

by  |  earlier

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I honestly always thought it was because of the supply.

Do you think they will ever go down either?

Call me stupid or whatever you would like, but I'm completely clue less on the subject.

Answer this as if I just came to this planet and I'm new to the U.S.

Thank you :)

10 points best answer!

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11 ANSWERS


  1. The supply has remained relatively constant for the last few years while the world's demand has shot off the chart.

    It's really not as complex as some would like you to believe (greedy speculators, some kind of covert price controls, countless conspiracy theories, etc) it's simply a relatively fixed supply and an ever increasing demand.

    We can't seem to control the demand, and increasing the supply with domestic resources will take considerable time. Common sense energy policies should have been in place years ago - that's why we pay our representatives the big bucks.


  2. First, the prices aren't that high, people in Europe have been paying way more than this since the '80s, that's why they have  Nuclear power plants and a first rate mass transit system.  We would too if we had modified our lifestyle after the last time this happened, the way they did.  Demand is not going to stop going down until everyone in the world understands that the supply of oil is running out, it is not a renewable resource, and that is not going to happen as long as people think that there is unlimited oil world wide just waiting to be pumped.  Simply put, assume 50 people want 20 gallons each, they have 500 gallons between them, nobody want to compromise so it the people with the most money get their oil first and anyone else does without.  The U.S. has 10% of the worlds population and 3-10% of the worlds oil reserves, depending on your source.  Despite this we use 25% of the worlds oil and 40% of the worlds energy.  China and India, both of whom have much larger populations, now want to use the same amount of oil and energy per person that we do, do the math, the world cannot produce that much.  The same is true of food and other resources.  Barring some major technological innovation, and we aren't investing significantly in any such research and development, the only workable solution is long term negative population growth with a drastic reduction in driving and electrical use until we've achieved a balance between population and what we can produce, until then things will only get worse.

  3. #1 Two Oilmen in The White House = Sell The American People Down The River For The Best Price.

    #2 Friendship by the Bush Crime Family With Ben Lauden Family and other Saudi Oil Princes.

    #3 Picked a fight with the third largest oil reserve country in the world, Iraq, and then see to it their worldwide oil production is limited to only 10%.

  4. Greedy American businesses created an economy in China. Now they need an abundance of oil which stresses supply because of their huge demand.

  5. Also greedy oil producers keeping the production levels down to bleed the oil consumers dry.

    Refineries are a part of the problem also.  One yet component is the oil speculators that purchase oils by the 1000's of barrels and reselling it at profits.  These middlemen need to be named and all the world will perhaps re-think the speculating rules for doing business.

  6. A couple of reasons...

    #1: The value of the dollar is half that compared to what it was in 2000.  So everything we import (oil...) is now twice as expensive.

    #2: More demand for oil from China and India.

    #3: No increases in oil production.

    #4: Speculators - for every barrel of oil they buy, there is one less barrel of oil... a refinery can convert into gasoline.

    #5: Lack of refineries - we use more gasoline than our refineries have the capacity to make... so we have to import some of our gasoline (see point #1)

  7. While supply has remained more or less the same over the last few years, China and India have a HUGE demand for oil, hence one reason the price of oil is up.

    Another reason is the decline of the US dollar. You are seeing the rise in all commodity prices due to the falling dollar. Oil hasn't gone up as much if it is priced in euros.

    Below is a quick FAQ of high oil prices today.

  8. Both China and India have become much bigger players in their demand for oil. Demand increases prices go up. You want cheaper oil, contact your Congressman and Senators and tell them we want to "Drill Here, Drill Know and lower prices."

  9. It is the "Enron Loop hole",  the biggest culprit. This allows futures Commodity traders to buy oil still in the ground by putting up a mere 7.5% of the bid price. Do the Math, a 10% increase in oil price will net the trader a 130% profit!!!! All other commodity traders must fork up 15% while stock market futures are required to anti up 50%. It was just this sort of thing that caused the stock market crash in 1929 when stock future traders were unregulated and typically ony put up 10%. Think we would have learned from that. I was Clinton who in 2000 signed the legislation to allow this Loop Hole, not Bush who did not come into office until 2001. His Adminstration prosecuted Eron for their mis deeds. Clinton allso signed Legislation in 1999 that remove most oversight of Mortage companies. This is the root cause of the Sub Prime mess in the housing industry and cause of many many forclosures.

    Maybe a lot of people are getting rich on it! Maybe even a few Congressmen/women as well as media folks!---Edit--- You see, if The price of oil was to drop 10% or more overnight or in short term, then a lot of "Speculators" would be caught with their collective pants down, unable to meet the Options Call and the oil market would crash. Now do you really think OPEC will let this happen and destroy all their hefty profits? If and when it comes down, it will be slowly in order to avoid a Crash!

    Google it, it is all there to read!

    Edit: The Enron Loop Hole also exempts electronc trades from oversight. Here is a news article on the subject:

    http://blogs.abcnews.com/politicalradar/...

    Sorry Leanne---There is plenty of Supply, Saudia Arabia can open the valve anytime they want to. They are getting rich so why increase supply and lower the price? Ever look at some of the construction going on in the Mid East with the money you pay for gas? Take a look using Google Earth. Facinating!

    Here are some Pictures of what your Gas money is building in Dubai!

    http://images.google.com/images?sourceid...

    Proud Vet

  10. Supply and demand, my friend.  We need to get our own supplies and get off the opec tightrope!

  11. Don't get frustrated, lad! If I were to give you the exact answer, the crazed media, market and governmental spin machines would come up with a completely new and different reason to why oil is high. This is simply because they do not want a solvable solution to higher prices therefore justifying and fear-mongering it to go even higher! Confused? This is exactly where they want you!

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