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The High Price of Gas

Updated on February 26, 2012
Gas in Death Valley, Calif.-The extreme!
Gas in Death Valley, Calif.-The extreme!
The normal in Calif and on the East Coast
The normal in Calif and on the East Coast

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.


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    • adjkp25 profile image

      David 5 years ago from Northern California

      Right now the oil speculators are causing the biggest ripple. I did some research, which led to me doing a hub, on the impact these speculators have on the market.

      The US is producing more oil than it has in 8 years. In fact the big oil companies are now exporting our own oil because they can make more selling it on the market.

      Our own consumption, compared to Feb 2011, is down about 5%.

      The supply and demand argument works most of the time, just not this time.

    • CHRIS57 profile image

      CHRIS57 5 years ago from Northern Germany

      Well written hub, puts focus on what is happening on this planet.

      For long term oil price development speculators can be ruled out. On the long run only the sound demand on oil from developing economies and the BRIC economies counts.

      Where is the US share of world oil consumption now a days? 17% or so and loosing ground and loosing control of whatever may have been controllable.

    • perrya profile image

      perrya 5 years ago

      well, gas just went up a few cents from just yesterday. I knew it would.

    • American View profile image

      American View 5 years ago from Plano, Texas

      China is looking to corner the market on oil. They want to buy it all and make everyone come to them. And why not, he who controls the oil controls the world if they are inclined to. Obama has no clue, his latest answer, algae. When will the BS end.

    • perrya profile image

      perrya 5 years ago

      Indeed, all of these items impact oil.

    • Au fait profile image

      C E Clark 5 years ago from North Texas

      Speculators are driving the prices up, but it's not because of a threat of war, it's simply because they can. They buy oil and then it's theirs. They can sell it to whomever they want and at pretty much whatever price they want. Not so different from you buying a car and then at some later time deciding to sell it again. Government doesn't dictate to whom you can sell the car or what price you can ask. It's your car and you can do what you want. Same thing with oil. It isn't owned by our government, and while neither you nor I like what's happening with the price, it is legal, and so speculators get away with it.

      Most of the oil drilled in this country is not sold in this country, but to other countries where our oilmen and speculators can get a much higher price than they can here. Most of our oil comes from the Middle East and South America where it's dirt cheap, then bought up by speculators from there so the 'middle man' can hike up the price and get his cut. It's all about the money and selling to the highest bidder. None of these other things matter. They're just a means of making us all feel better and accept being 'over a barrel.'