Writing Project 3

David Hefty

Mr.Micer

English 102.006

May 2, 2011

Why are gas prices so high?

            Why are gas prices so high? This is a very controversial question that causes many arguments or even just conversation because gas prices play an important role in many individuals’ lives on a daily basis. Gasoline could manage to exceed $100 a barrel which would put a gallon of gas at about $4. This has more of an affect than most individuals would think about because with the rising costs of energy the price for a lot of other things will increase as well. The businesses that produce goods and products will have to increase their price to the consumer in order to keep the same amount of profit. If gasoline raises just $1 a gallon it will cost an average of about $750 a year for most individuals. This has more of a psychological effect on individuals when they see $4 a gallon prices. The main issue at hand is why are gas prices continuing to rise? Why are some of the larger corporations given tax cuts? Why have these same oil corporations been reporting all time highs in profits when most Americans are struggling to pay for gas? Should these larger oil corporations be given tax cuts while they are reporting record highs in profit while most Americans can barely get by?

            After doing some more research why gas prices are continuing to increase, I was pleased to find some great answers at http://www.financialnut.com/why-are-gas-prices-so-high-now.   Like I said before the cost of a gallon of gas is mostly determined by the cost of crude oil, about 71%, 14% taxes, 10% marketing and 5% towards refining. The expansion of many countries economies has increased the demand for oil because oil is what drives these economic booms. With a much higher demand for oil and the supply not increasing, the obvious answer is to charge more for the oil. I also found it interesting to know that exchange rates play an important role as well because oil is exchanged in dollars. So the value of a dollar is quite important to the price of gasoline. The most interesting thing I found though was basically that politics doesn't play as major of a role as I thought it did. Yes, government does play a important role in pricing gas but no to the extent I once believed. I think the idea of economics just makes a little more sense to me rather than just blaming it on other things. Again, I do realize that the government does play a role in the pricing of gas but I just think the economics plays an even bigger role.

            An argument for the recent rise of gas prices might be that oil is becoming scarce and harder to find. This will obviously lower the supply thus increasing the demand for oil. With a higher demand comes a higher price that individuals will have to pay for oil. Oil is becoming scarce or harder to find then this would be one of the reasons for the price increases. Based on <http://www.newser.com/story/112166/exxon-oil-becoming-hard-to-find.html>, Exxon states that they are having trouble finding oil and that their reserves are decreasing in size. For every, 100 barrels of oil purchased they are only able to replace 95 of them. According to http://www.telegraph.co.uk/comment/3557898/Oil-is-expensive-because-oil-is-scarce.html, three of the major oil companies, Shell, Exxon, and BP are all reporting drops in oil outputs. Exxon reported a 10% drop for the year. Non-OPEC oil production has only increased in Russia. Oil production is decreasing in 60 of the 98 oil producing countries. Finding such information has made an interesting discovery for me. Just the idea that most of the oil producing countries have peaked in their oil production has alarmed many of the westernized nations.  Iraq is one of the countries that does have a supply of oil but with recent war and not really knowing what to do with their government has made an increase in oil production from Iraq not very probable.

            The most intriguing thing that I have found was on an episode of Top Gear. Top Gear is a show about automobiles that is aired on BBC America. The three talk show hosts reviews a vehicle and they have challenges that they must complete. There is an episode I watched while I was working on this blog about why gas prices are so high, and it included James May, traveling from London, England to the United States of America. He travels to California and test drives the new Honda vehicle that runs on hydrogen. Hydrogen is a resource that is in abundance and is renewable. The planet earth has its own system for which to replenish water in to the eco system. The car was fueled by hydrogen instead of by gasoline. It was able to travel almost the same distance on a tank of hydrogen as compared to gasoline. Also, you can find hydrogen pumps at certain specified gasoline stations in California. California has been a front runner in clean air regulations and emission tests. If other states started to force these hydrogen pumps being put in all across the country, there would be a huge increase in popularity. Most Americans do not want to buy something that they can only drive in a certain area. They want the freedom of the open road and the ability to travel anywhere without being restricted. If Americans were approached with the idea of buying one of these fuel efficient or renewable resource vehicle and being able to keep their normal every day vehicle, just drive the every day gasoline guzzling vehicle on the weekend and Monday through Friday drive the other, then many individuals may be open for listening a bit more than in the past.

             In conclusion, I believe that gas prices are a very complicated issue that will always be a very controversial topic up for discussion for many years to come because it has such a wide impact on the lives of so many individuals. The price of gasoline is not all that expensive when compared to European countries but most Americans are already having a difficult time making ends meet. So, the price of a gallon of gas poses a great threat for them in many different ways.  Whether it is actually first hand at the pump, paying for gasoline, or if it is buying groceries, it honestly has an enormous impact on our daily lives. There are many reasons as to why gasoline prices are so high, but there is not a one hundred percent bullet proof reason. Many, are just claims that yes, can be backed up, but with so many different view points it can get very grey. Nonetheless, gasoline prices are a very important factor in many individuals’ lives.

Works Cited

"Fuel Fix » Q&A: Why Are Gasoline Prices so High?" Fuel Fix » Your Daily Must-read Source for News and Analysis on the Energy Business. Web. 14 Apr. 2011. <http://fuelfix.com/blog/2011/03/10/qa-why-are-gasoline-prices-so-high/>.

"Q&A: What's Behind High Gas Prices? : NPR." NPR : National Public Radio : News & Analysis, World, US, Music & Arts : NPR. Web. 14 Apr. 2011. <http://www.npr.org/templates/story/story.php?storyId=5365439>.

"Q&A: Why Are Gas Prices Still so High, When Oil Is Trading Lower Again?" Current Oil Price. Web. 14 Apr. 2011. <http://currentoilprice.org/qa-why-are-gas-prices-still-so-high-when-oil-is-trading-lower-again>.

"Q&A: Why Are Gas Prices Still so High, When Oil Is Trading Lower Again?" Current Oil Price. Web. 14 Apr. 2011. <http://currentoilprice.org/qa-why-are-gas-prices-still-so-high-when-oil-is-trading-lower-again>.

"Why Are Gas Prices so High and Change so Quickly? | Coal Geology." Coal Geology & Mining - Coal Price, Clean Coal, Coal Energy. Web. 14 Apr. 2011. <http://coalgeology.com/why-are-gas-prices-so-high-and-change-so-quickly/15227/>.

"Why Are Gas Prices So High Right Now?" Tips On Budgeting | How to Manage Personal Finances | Personal Finance Blog. Web. 22 Apr. 2011. <http://www.financialnut.com/why-are-gas-prices-so-high-now/>.