6/28/2017

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The High Price Of Gas

Energy prices, oil, gasoline, natural gas, and electricity, have risen extensively over the past few years. The reasons for the upswing in costs are many and varied, and by all indications, prices will remain high.

Since the 1970's, gas prices have risen at a slow but steady pace, but over the last 4 or 5 years, prices have jumped and continue to go up at a much faster pace than ever before.

Many people blame the major oil companies for the sudden and dramatic increases in gasoline prices, but after looking at all the evidence, you will see that the blame falls on more than just one cause.

  • The major oil companies, Exxon/Mobil, Chevron, British Petroleum, Arco, Royal Dutch, Conoco/Phillips, Texaco, Shell, and others can share some of the blame, but not all of it. Like any other businesses, oil companies are focused on making profits for their stockholders, and that's exactly what they are doing by posting record profits.
  • Supply is a factor because oil companies are not, or they claim they are not, capable of producing the millions of gallons of gasoline and oil based products that we use on a daily basis. The supply is based on the amount that is actually drilled and where it is drilled.
  • The demand far exceeds the supply of gasoline in the United States, thereby making it necessary to import huge amounts of oil from around the world.
  • The refining capabilities of the major oil companies are important. Many refineries have been shut down in recent years and very few have been built to replace them.
  • Refineries face stiff governmental regulations brought on by environmental questions and the need to make them safe and environmentally friendly. Some oil companies maintain that there is no profitability in building new refineries because of all the laws and regulatory restraints and issues.
  • The price of crude oil is high and it's getting higher by the day. As goes the price of crude oil, so goes the price of gasoline and other oil based products.
  • Gas prices often reflect the changes in weather and other forces of nature. If there is a hurricane, a major earthquake, flooding, or other natural event, gas price may rise or fall.
  • The stability or instability of governments and the mind set of politician around the world have a significant impact on the sticker price at the gas pump.
  • OPEC, the Organization of Petroleum Exporting Countries, a conglomerate of oil producing countries may have more of a say so in what you pay for gasoline than you would probably care to hear about. But the truth is, Indonesia, Angola, Iran, Iraq, Saudi Arabia, Libya, Kuwait, Nigeria, Qatar, the United Arab Emirates, and Algeria make up the cartel that sets the prices on world oil and petroleum products.
  • With the demand for oil and gas increasing in developing nations like China, India, Pakistan, and Indonesia, oil and gas prices are sure to remain high for the foreseeable future.

As consumers, we must find ways to develop and promote the use of alternative energies such as wind, hydroelectric, solar, bio diesel, geothermal, ethanol, nuclear power, and other sources and we must cut down on our personal use and dependence on fossil fuels.

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