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Why are gas prices so high?

Gas prices fluctuate based on many factors. As global economy grows, demand for gas increases which brings gas prices up. Many speculate that oil companies increase gas prices in order to increase profits. The fact is, if oil companies did in fact increase gas prices artificially and gas was abundantly available, demand would be lower which would bring gas prices down, this is basic economics. You wouldn't pay $10 for loaf of bread if you knew that every store around the corner sold it, those stores know that you wouldn't either. Let's stop blaming oil companies and start looking at how and why we spend so much gas:
  • Most of us drive in heavy traffic to and from work, if we had public transportation as they do in Europe, we wouldn't spend so much gas. Gas is very expensive in Europe, but who really uses it. Most people use the subway to go to and from work. The blame here can be put on local and state governments. Contact your congressman and ask why isn't there a decent public transportation infrastructure in your area. Why do I have to wait 30 minutes for the bus? Why cant bus routes increase in frequency? By the way, many buses in large city now run on Natural Gas, a non-pollutant fuel.
  • Most of us drive gas guzzlers, sports cars and SUVs. It is human nature to want to drive these types of vehicles because they make us feel better. With better education though, people will find that happiness doesn't necessarily come in the form of 4 wheels, but that's just my opinion. I used to drive an expensive BMW, I finally gave up on the idea. Now I drive a 2008 Toyota Prius and I couldn't be happier knowing that I can drive further and spend less money on gas, money I can use to buy myself and my family nicer gifts.

    How much do gas stations profit? According to the fueleconomy.gov, as of November 2006, this is the price per gallon breakdown:
  1. 57% Crude Oil
  2. 15% Refining
  3. 8% Distribution and Marketting
  4. 20% Taxes
These ratios change on a yearly basis.


- A Primer on Gasoline Prices
- What is OPEC?
- Gas Taxes
- U.S. Gas Map

 

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