- Business and Employment
The High Price of Gas
The cost of living and the price of gas is rapidly rising. Yet, according to many, world consumption does not warrant the recent rise in gas prices for cars. In California, gas has jumped at least 30 cents in the last 14 days. In fact, every week it rises to where it is averaging anywhere from $4.25-4.50 a gallon (about 4 liters). In France, it is over $8. In Florida, it is around $6. It is typical to spend $55-80 a week for commuting. Even cars with 40 mpg on the highway are not exempt from this cost.
The worse news is that the prices will continue to rise and having $5-5.50 a gallon could be a reality by May. But why?
A Shell Oil executive cited many reasons:
- China is consuming more barrels of oil. It is now at nine million, by 2014, it will double and they have priority on the oil market.
- India consumes about 5 million and by 2014 or so, that will double.
- Three oil refineries on the east coast of the US are closing down because they cannot make a profit
- The use of the US national oil reserve will have little impact because enough of it cannot be used as it is for "real" emergencies
- The oil producers need to be making 98 million barrels at minimum, not 88 million as they do now
- The US has a $10 trillion dollar debt that must be balanced
- If the cost of a barrel of oil rises to $120, gas prices will hit an average of $5.50-6 in the US
- Speculators are driving up the prices because of the real threat of war with Iran and how that will disrupt the world's oil market for a considerable time
- In California, which has the most stringent controls on refined gas, causes a bottleneck in gas production to meet clean air requirements
Even if the threat of war with Iran was not there, gas would be rising, just not as rapidly and this is all a new reality that everyone must face because China and India are the major new oil consumers.