I understand the basics behind supply and demand, but I'm wondering what is really going on with gas prices these days. What is different between now and the last couple years that is causing such a dramatic increase? Is this something the oil companies could control if they really wanted to? If so, are they shooting themselves in the foot by what they could be doing to economies across the world with these prices?
Why are gas prices rising so quickly?
- Thread starter raiden031
- Start date
mhstennis100
Semi-Pro
OPEC can raise the prices too, if and when they want. I think OPEC countries control around 66% of the world's oil reserves. We were talking about this in world history yesterday.
It is primarily because the USD is doing crap against other currencies. Oil has cost the same but as the USD goes down, we need more of the USD to purchase the same oil. Plus Bush has started a war which is spending billions each and ever day driving our nation into even more debt.
Here's a 2005 comparison of gasoline prices from around the world. I found it pretty interesting.
http://money.cnn.com/pf/features/lists/global_gasprices/
Note that the vast majority of the higher prices are in countries that have no domestic oil refineries. That's critical to understand because the cost of importing gasoline is fraught with taxes and fees that get passed on to the consumer. The USA has among the highest refining capacity in the world, which is the only thing keeping gasoline prices here in the states from going through the roof at the moment.
Also, I thought this article was funny. It was from 2004, just 4 short years ago.
Note that they were claiming the "realistic" price for crude oil was $30. In 4 years, we're at $120, an increase of 300%. Also note that they were saying the EXACT same crap back then: "There's a $15 fear premium built into the price (at $43 per barrel)." Now they're blaming the rise to $120 on "speculators" in the crude market. More lies. Oil is going to $180.
Gasoline prices are related to oil because the refineries are seeing their profits cut when they pay more for oil. Look into the "crack spread" to see how oil prices influence the gasoline prices.
Here's the article from 2004, good for a nice laugh:
http://www.bankrate.com/brm/news/auto/20040607a1.asp
http://money.cnn.com/pf/features/lists/global_gasprices/
Note that the vast majority of the higher prices are in countries that have no domestic oil refineries. That's critical to understand because the cost of importing gasoline is fraught with taxes and fees that get passed on to the consumer. The USA has among the highest refining capacity in the world, which is the only thing keeping gasoline prices here in the states from going through the roof at the moment.
Also, I thought this article was funny. It was from 2004, just 4 short years ago.
Note that they were claiming the "realistic" price for crude oil was $30. In 4 years, we're at $120, an increase of 300%. Also note that they were saying the EXACT same crap back then: "There's a $15 fear premium built into the price (at $43 per barrel)." Now they're blaming the rise to $120 on "speculators" in the crude market. More lies. Oil is going to $180.
Gasoline prices are related to oil because the refineries are seeing their profits cut when they pay more for oil. Look into the "crack spread" to see how oil prices influence the gasoline prices.
Here's the article from 2004, good for a nice laugh:
http://www.bankrate.com/brm/news/auto/20040607a1.asp
ollinger
G.O.A.T.
The remarkable thing is that prices aren't rising even faster. There are well over TWO BILLION people in India and China who suddenly are using energy at an exponentially increasing rate both in their industries and their personal lives. China opens on average one new electrical generating plant PER WEEK (mostly coal fired, but indicative of how quickly industrialization and prosperity are increasing there). And the last refinery to open in this country opened in the 1970s. I'm grateful gas is only $4.00....for now.
serve/and/volley
Rookie
Compared to Europe, gasoline is cheaper in the US. Americans are now starting to realize that their automobile-dependent expansions of sprawl after WWII is just not sustainable any more. The US will never be able to return to their lifestyle during the period of 1945-2000. So Americans will have to just get used to living with a little less.
Nadal_Monfils
Semi-Pro
It is now more expensive to get to the oil as well because we have already gotten the majority of the oil right from the surface and now have to dig down extremely deep to get to the oil.
supermario343
Hall of Fame
2 words..George Bush lol
lethalfang
Professional
We just need to find an alternative source of energy, e.g., solar power. It'll take time and money, but once we do, it'll solve a lot of problems.
ericsson
Hall of Fame
Yea tell me about it, i think we have the highest prices in the world :-?, the price for Gas 98+ is currently 2,407$ for one liter
LanEvo
Hall of Fame
i completely agree with u, and what bush has done to our country during these 2 terms will take decades to rebuild
m1stuhxsp4rk5
Professional
im about to get my license soon now i dont want to get it with the prices these high
beedlejuice22
Semi-Pro
the stock market is crashing which is putting the entire economy down the pooper. soo most prices of things are going up, but gas is just the most noticable
Lendl and Federer Fan
Hall of Fame
Simple, George W. Bush and Dick Cheney. If you voted for them, just blame yourself.
Kobble
Hall of Fame
I voted for Nader, so I'm off the hook no matter what occurs.
I just watched a documentary on the car of the future. Very good. It showed all the alternative energy sources, and automotive engineering trends. They said we basically increased the efficiency of engines significantly since the late 80's, but shot ourselves in the foot by making heavier vehicles. As a result, average fuel efficiency is about 2 gallons better than 1987.
One interesting fact concerning gas prices was that Iceland is $8.00 a gallon, and they are trying to increase the usability of hydrogen. They currently have hydrogen (fuel cell) powered buses there.
I don't know if anyone else has seen it, but check out the Tesla Roadster (fully electric). It goes 0-60 in 3.9 sec., and gets the equivalent of 135 miles per gallon. I heard that one charge costs about $4.00 in electricity, and apparenly gets you 220 miles. The only drawback is the transmission can't handle the 3.9 sec. acceleration for more than 1000 miles. Once that is fixed, you can pick one up for around $80,000.
I just watched a documentary on the car of the future. Very good. It showed all the alternative energy sources, and automotive engineering trends. They said we basically increased the efficiency of engines significantly since the late 80's, but shot ourselves in the foot by making heavier vehicles. As a result, average fuel efficiency is about 2 gallons better than 1987.
One interesting fact concerning gas prices was that Iceland is $8.00 a gallon, and they are trying to increase the usability of hydrogen. They currently have hydrogen (fuel cell) powered buses there.
I don't know if anyone else has seen it, but check out the Tesla Roadster (fully electric). It goes 0-60 in 3.9 sec., and gets the equivalent of 135 miles per gallon. I heard that one charge costs about $4.00 in electricity, and apparenly gets you 220 miles. The only drawback is the transmission can't handle the 3.9 sec. acceleration for more than 1000 miles. Once that is fixed, you can pick one up for around $80,000.
spikyblackhair
Rookie
There are many reasons, some of which have already been mentioned here. I'll list the major ones that I can think of:
Financial
1) The depreciation of the U.S. dollar. Keep in mind that oil is priced in U.S. dollars.
Supply
2) Instability and uncertainty in major oil exporting countries. Iran is one country which has threatened to cut off oil exports. Iraq is obviously a large source of instability in the Middle East. Trouble in other countries such as Nigeria has also contributed to the level of uncertainty in the market.
Financial
3) Uncertainty leads to speculation, and the futures market has played a role in pushing up the price of oil.
Supply
4) Russia and Iran have announced that they will be forming another oil cartel.
Demand
5) Rising economies in China and elsewhere have created higher demand for oil, while consumers in the U.S. continue to buy SUVs and pickup trucks for joyriding.
Financial
1) The depreciation of the U.S. dollar. Keep in mind that oil is priced in U.S. dollars.
Supply
2) Instability and uncertainty in major oil exporting countries. Iran is one country which has threatened to cut off oil exports. Iraq is obviously a large source of instability in the Middle East. Trouble in other countries such as Nigeria has also contributed to the level of uncertainty in the market.
Financial
3) Uncertainty leads to speculation, and the futures market has played a role in pushing up the price of oil.
Supply
4) Russia and Iran have announced that they will be forming another oil cartel.
Demand
5) Rising economies in China and elsewhere have created higher demand for oil, while consumers in the U.S. continue to buy SUVs and pickup trucks for joyriding.
dannyjjang
Semi-Pro
because americans are stupid voting president bush twice
and of course its not because we are running out of gas its because the federal reserve is printing money like paper!
and of course its not because we are running out of gas its because the federal reserve is printing money like paper!
spikyblackhair
Rookie
I'll have you know that only the majority of Americans are stupid :-|.
serve/and/volley
Rookie
Not only Americans, and not just the majority, but almost every human being is stupid.
tennisfan_23
Rookie
Read "The Empty Tank" by Jeremy Leggett.
Steve Huff
G.O.A.T.
I used to think prices in the US were controlled by Supply and Demand. Normally, I think they are, but not with gasoline. I think the 3 main reasons gas is high is:
1. There's no incentive for government to keep it low. I'm sure the majority of Congress has a stock portfolio with large shares of Exxon/Mobil and other oil/gas companies. Conflict of interest??? They should be required to reveal their holdings.
2. Politics has tested the public. A couple of years back, gas went up to just over $2/gal, and then went back down. I told some people then that it was just a test to see how the public would react. There really wasn't much of an outcry. I knew gas would go up again. There's really not much of an outcry now.
3. Taxes. Our government depends on inflation. Without inflation, the government would have to increase tax rates. With inflation, government gets more tax money without ever having to increase the tax rate. Do you think our government really wants us to use less gas? They get paid by the gallon. Where's the incentive to make cars get better mileage? If engines become more efficient, government requires more safety --ie. more weight. Consider that a new Mini Cooper weighs more than my 87 Maxima did. Yes, safety is good, but when you consider that almost every efficiency improvement ever made was offset by some law that decreased mileage, you have to wonder.
1. There's no incentive for government to keep it low. I'm sure the majority of Congress has a stock portfolio with large shares of Exxon/Mobil and other oil/gas companies. Conflict of interest??? They should be required to reveal their holdings.
2. Politics has tested the public. A couple of years back, gas went up to just over $2/gal, and then went back down. I told some people then that it was just a test to see how the public would react. There really wasn't much of an outcry. I knew gas would go up again. There's really not much of an outcry now.
3. Taxes. Our government depends on inflation. Without inflation, the government would have to increase tax rates. With inflation, government gets more tax money without ever having to increase the tax rate. Do you think our government really wants us to use less gas? They get paid by the gallon. Where's the incentive to make cars get better mileage? If engines become more efficient, government requires more safety --ie. more weight. Consider that a new Mini Cooper weighs more than my 87 Maxima did. Yes, safety is good, but when you consider that almost every efficiency improvement ever made was offset by some law that decreased mileage, you have to wonder.
Kobble
Hall of Fame
Interesting. Regardless, if the reason is lack of cheaply accessable oil, they should have started on electric back in the early nineties. They say the Chevy Volt is unlikely in this decade; we may have the technology in 10 years. Ten years? I want to ****ing travel, and have a family before then. Instead, I get to cry at the breakfast table over $8.00 a gallon fuel, and tell my kids about the good old days of seeing things in person. I haven't done all my homework, I'm just getting started, but it seems like we are either funding this war, or we are victims of a government who's head was in the sand. I hope it is the war.
By the way, what does everyone else think about the Tesla electric car. Pretty cool. Minus, the transmission troubles, and $40,000, I would purchase one.
mhstennis100
Semi-Pro
In 8th grade (2 years ago), we watched a documentary about oil and gas and stuff. They focused on a Volvo car from the 70's when gas went really high for a time. Volvo made a very affordable car that got 100+ mpg, but by the time it was ready to be mass produced, prices went back down so they scrapped it. So it is possible to make a non hybrid, safe, and affordable car while being extremely fuel effecient.
I think it's unfair to criticize every suburban owner. My aunt has 5 kids and that's one of the only vehicles big enough to carry their family plus luggage on trips and such.
I think it's unfair to criticize every suburban owner. My aunt has 5 kids and that's one of the only vehicles big enough to carry their family plus luggage on trips and such.
JohnS
Semi-Pro
It could be a conspiracy thing.
A push to save the environment and bring new technology en lieu of oil. With gas prices effecting the U.S., it'll push americans to come up with new technology faster.
Supply and Demand
yes... that's an option
Bush
hm... not so much him seeing how he can only do so much. Even before the war, gas prices were already going up so blame ourselves ( x million people) before blaming one person.
Federer
If he would just win the damn french open, mother nature would replenish oil from every refinery. But, fresh water would then deplete because Nadal did not regain the title.
A push to save the environment and bring new technology en lieu of oil. With gas prices effecting the U.S., it'll push americans to come up with new technology faster.
Supply and Demand
yes... that's an option
Bush
hm... not so much him seeing how he can only do so much. Even before the war, gas prices were already going up so blame ourselves ( x million people) before blaming one person.
Federer
If he would just win the damn french open, mother nature would replenish oil from every refinery. But, fresh water would then deplete because Nadal did not regain the title.
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