Why is the gas price so high?

Question

this is probably a really stupid question but i have to know.

Answer 1

Since you are asking about the price of gasoline rather than crude oil, I’ll not bore you with an explanation of the factors causing crude oil prices to rise. However you have to understand that the price of crude is not an insignificant contributor.

The price of gasoline (derivative of crude oil) in the United States is directly linked to the price the oil companies must pay for crude oil purchased on the world market. US oil companies own and produce very little of the oil they refine/sell. So as the market price, spot price and posted price of crude increases so does the cost of refining this raw material into gasoline. As most people understand the difference between the spot price and the market price of crude, I wont bother with that one. But the posted/listed price of crude is the arbitrary sur-charge OPEC tacks onto the market price of crude. At times this sur-charge is fixed however member states have a great degree of latitude.

Additionally there is the matter of refining crude into gasoline. The US government both Federal and State began in the 1970’s to take steps to freeze both drilling and refining of crude and simultaneously discouraged via legislation (often inadvertently), the production of alternative sources of energy. At that time the US population was approximately 200 million. But the US actually produced more than 75% of its oil supply domestically. The US government purchased oil from foreign sources as part of the Strategic Oil Reserves and encouraged US oil companies to patronize specific oil producers friendly with the US but the country was essentially energy independent. However today, 40 years later, the US population is nearly double that figure yet refining capacity has not grown. In stead, it has been reduced by technical improvements which cause the periodic shut down of a refinery. Such improvements are required to fill the varying State fuel mandates. Therefore, the US has become one of the worlds larges importers of gasoline. Most of which comes from Mexico, Canada and Venezuela.

But remember that these suppliers also have to fill the needs of other nations which have little or no refining capacity. That means that overall demand for gasoline far exceeds supply. As a result the price of gasoline goes up.

Answer 2

Bush

Answer 3

It isn't a stupid question, most people don't know, and the media doesn't do a good job explaining it; they'd rather have you believe conspiracy theories just for the ratings that would ensue from everyone tuning in to their broadcast on it.

First, there are several factors for the rising cost of oil, however, there is essentially one primary factor for the skyrocketing cost of oil; that is to say the rise in gas prices very very quickly and very very dramatically: the domination of the market by oil speculators rather than consumers.  The oil market is totally unregulated by the government, call it another problem of an executive branch that is too conservative in this area and doesn't believe that Washington should regulate anything, and a legislative branch that is too content with the fact that the current president is leaving office soon.

Something like 68%-73% of the market is comprised of oil speculators, whereas in 2001 only 23% of the market was comprised of oil speculators and the rest were consumers.  Because the government doesn't regulate this, more people are trying to make profit off oil that consume it as a commodity.  The current Chief Executive Officer of Exxon Mobile said before the Senate in April that "with market conditions the way they are, the cost of oil per barrel should be between $50-$55 (they are about 147 dollars)".  This is a result of too many speculators.

The disturbing thing is to see the Bush administration once again give in to big business and use the prices to push the idea of the necessity of drilling for more oil.  The problem is not a fall in supply, but the degradation of the value of the current supply by the oil speculators.

Second, there are many more factors that contribute, and will continue to contribute to the gradual rise in prices.  One, the world's population continues to increase and the world's economy is becoming more and more viable everyday.  We use to live in a world of two economic powerhouses: the U.S. and the U.S.S.R.  After the Soviets collapse, America became the only superpower.  While it is forecasted to stay this way for at least another 35 to 50 years.  The economies of other nations are becoming more prosperous, which means more people around the world are taking to the roads because they can afford cars.  This means the demand is raising.  The problem is that oil is finite, and its supply is slowing being drained everyday.  Supply and Demand dictates that when demand rises and supply falls, the products value rises and therefore, so does its price.

Another contributing factors is overspending by the government.  Bush has spent more money that any other President in history except FDR who fought most of world war two.  Bush has even spent more than the spending giant Ronald Reagan.  Republicans tend to be credit card spenders, that is to say, that spend without taxing, increasing the national debt and depreciating the value of the dollar, which causes oil prices to rise to offset it.  The democrats tend to be cash and carry spenders, that is to say, the tax what the need more from the richer, less from the middle class, less from the working class, none from the poor, and then buy what they need.

Another contributing factor is political instability.  Where the oil resources are the vastest, they are also in the most politically unstable region in the world. Since 2001 America has educed a war in Afghanistan and Iraq, while subtly threatening Iran, and lecturing Syria about Israel.  This causes oil future traders to decrease the value of the oil because when things like this happen, they predict future problems (like if bush attacked Iran, half of the worlds oil supply would stop flowing and cost of oil would be about 300 dollars a barrel, and about 15 dollars a gallon).  So America's foreign policy is a huge contributing factor.

Finally, oil companies sometimes charge more to gas stations in order to secure financial resources to launch future expeditions for oil.

Hope that helps.

Answer 4

It is simple. The supply and the dollar value.

Answer 5

well if you think its high here look at some places in europe. there its like close to $10 a liter

Answer 6

Because the value of the dollar is so low.

Answer 7

Well, let's see:

1.  OPEC is reducing production (READ:  They're sticking it to us -- there's no need for them to reduce production but they're doing it anyway)

2.  The demand for oil has gone way up in China and India, and when demand is higher and supply is lower -- well, low on paper -- companies charge more.

  

3.  The Democrats are doing everything in their power to make us more dependent on foreign oil -- check the Congressional records over the last 20 years and you'll see that every piece of legislation aimed at developing the resources we have here in the U.S. has been shot down by the Democrats.  They oppose more offshore drilling, they oppose drilling in the ANWR, they oppose development of oil shale and buying oil sand from Canada, and they oppose nuclear power (Heck, even the French let nuclear power pass, and now they're the largest producer and "retailer" of electricity in Europe).

4.  A large group of American people were stupid enough to buy Al Gore's "An Inconvenient Truth" (which should have been titled "An Irresponsible Half-Truth," and as we all know a half-truth is a lie) and he's the leader of the crack-brained idiots that are pushing for $8.00 a gallon gasoline.

5.  The Federal Government makes more on a gallon of gasoline than the oil companies in taxes.  Great idea -- tax the h**l out of something you don't produce...

6.  The Federal Government has so over-regulated business that they've delayed the production of alternative sources of fuel by at least a decade (more like two).

7.  The United States as a whole has STILL not awakened to the fact that the oil supply on this planet is going to disappear, which is a very sad state of affairs because instead of having your average American looking and thinking to the future he/she is whining because it costs more to fill up their gas-guzzling SUV.

Answer 8

Because of the greedy oil companies.  Bush should have put a stop to it, however, why would he?  He is an oil man.  

http://money.cnn.com/2008/02/01/news/com...

Answer 9

http://www.youtube.com/watch?v=DnV1NE7kX...

Answer 10

rich people want get more rich that is why

Answer 11

Because people keep buying it.

If they stopped buying it (not just for one day) the price would come down.