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The Reason For High Gasoline Prices

Jul 30, 2008
Gas prices are at an all time high with no signs of price reductions. This issue has made several countries reconsider their strategies on this ongoing issue. Politicians and Democrats blame oil companies for the skyrocketing fuel prices.

Oil companies are raising oil and gas prices to get maximum profits. Next, blaming on oil companies is not the solution, as it will only add to the existing problems of rising oil and fuel prices. In addition, providing $100 rebate is not a solution either. The government is trying to reduce the cost involved in producing gas by relaxing clean air rules.

These are temporary measures used in an attempt to reduce fuel prices. Instead of addressing the problems honestly, politicians are trying their best to gather votes by making false promises in the name of reducing fuel prices.

Factors Responsible For Price Hikes:

The cost of crude oil plays a major role in contributing towards increasing fuel prices. Production and deliverance of a single gallon of fuel involves severe costs. These include costs of crude oil to refineries, refining costs and profits, distribution and marketing costs, federal and state taxes.

The cost of crude oil has doubled over the last two years. It has also affected the oil exporting countries. A major dispute rose in the supply distributions in the Gulf of Mexico and Nigeria. Whenever there is a major dispute, oil companies bid for the price of a barrel. The recent dispute is over Uranium enrichment and increasing poor relations in Venezuela.

The second major factor for rise in gas prices are the growing demand around the world. Demand for cars has risen in China and India. As these countries purchase oil from the United States of America, U.S. in turn has to buy them from another oil exporting countries to meet the increasing demand. Sales of super cars have increased greatly. For example, people nowadays continue to purchase SUVs that consume more gas than regular cars.

Production of crude oil is badly affected and even decreased in quantity, as reserves are getting empty and environmentalists banned new drillings. Many refineries are apprehensive to switch to Ethanol, because of its excessive cost. California experiences higher fuel prices, because of its distance from the Gulf of Mexico pipelines and strict fuel requirements.

Environmentalists have banned additional refineries, which in turn are adding to the existing price rise. Additional refineries are of huge importance to extract fuel, without which it is a bit impossible to reduce the rising fuel prices.

Finally, rise in fuel prices depend on the supply and demand of the product. Current economic conditions and weak U.S. dollar also contributed to hike in fuel prices. Natural calamities such as hurricanes and floods too contributed to the rising prices in oil.

Below mentioned are certain quick solutions, which every individual can follow to save fuel consumption:

1. Find substitute for fuel.
2. Look for alternate methods of energy
3. Find ways to use less fuel.
4. Increase Domestic production.
About the Author
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