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Why are Gas Prices So High?
© by Jennifer McLeod writing as jenjen0703, all rights reserved.
Gas Prices are Like Yo-Yo's
Gas prices have become so expensive; it's a wonder anyone can afford to drive cars anymore.
In 1998, I worked as an assistant manager at a gas station/convenience store. Each day, we had to set our gas prices according to local competitors' prices. We had contests that we named "Gas Wars", and sometimes our prices dropped as low as 97 cents per gallon for regular unleaded.
Haha! I was filling up the gas tank on my little Ford Escort for $10. And I could drive everywhere. Going to Lake Michigan whenever I wanted or taking a drive out of state was routine during that year.
Last week, the cheapest price I could find for gas was $3.32 per gallon. That is not premium price or even mid-grade. This is regular, unleaded gasoline.
So, the $10 that used to last you almost a week in your fuel tank (in 1998) is about how much people are spending each day, just to be able to drive to work and back home each day. And, that is just for local driving! (I am SO glad I am not delivering pizzas anymore!)
Are you able to afford the current gas prices?
Why are Prices So High?
So, what is causing the gas prices to soar through the roof, aside from the fact that our economy is in a terrible state?
- Lack of maintenance on pipelines. Refineries have lost huge amount of fuel from ruptured pipelines. An excellent example is Enbridge Energy Partners LLP. On July 26, 2010, an Enbridge pipeline broke near Marshall, Michigan. An estimated 819,000 gallons of crude oil spilled into Talmadge Creek and worked its way into the Kalamazoo River. Clean-up efforts are still in place today as a 35-mile stretch was contaminated by the oil. I lived less than a mile from the river and could hear the boats and machines working from early in the morning until late at night.
1st Week of August 2003
3rd Week of August 2003
End of September 2003
- Supply and demand. If it costs less to produce and supply gasoline, then gas prices will drop some. It also fluctuates according to what the customers are willing to pay. If there is not enough gasoline to meet customer demands, then gas prices will rise.
- Dependence on imported oil. According to the U.S. Department of Energy and the U.S. Environmental Protection Agency (EPA), most of the world's oil is found in the Middle East. Two-thirds of that oil is controlled by Organization of the Petroleum Exporting Countries (OPEC). OPEC's involvement cost our economy approximately $1.9 trillion between 2004 and 2008.
- Geographical location. Certain places have higher gas prices than others. According to CNN Money, in 2005, Amsterdam, Netherlands had the highest price at $6.48, while Caracas, Venezuela had the lowest prices at $0.12 per gallon. In the peaceful land of Geneva, Switzerland, gas prices soared at $4.74 per gallon.
Do you think we should break away from our dependence on foreign oil?
From a Fellow Hubber...
Themastudios gives an excellent analysis regarding the rise in gas prices.
Saving Money on Gasoline
Many of us have to stretch our money to make ends meet. Gasoline is one thing that can drain a person's cash reserves quickly. How can we save money on gas?
- Combine trips into one. If you need to go somewhere, run several errands at the same time while you are in the area. This will save miles on your car and money in your wallet.
- Drive fuel-efficient cars or hybrids. Consider selling your Buick and buying a compact-size car. Newer model cars are being designed to get better cash mileage than was ever possible before. The 2012 Toyota Prius v, according to fueleconomy.gov, gets a whopping 40 mpg on the highway and 44 mpg in the city.
- Buy a moped. I know this seems silly, but buying a moped can be a financial lifesaver for some. Last year, I bought a moped and drove it everywhere I had to go. The top-off speed was 42 mph, and I could fill the gas tank up for around $3. It also got over 100 mpg fuel efficiency. In Michigan, drivers are not required to carry insurance on mopeds, so this is a great way to save money.
- Walk. Walking is one of the best forms of exercise available. If your destination can be reached by foot, leave your car at home and walk. Those daily trips in your car to the party store (3 blocks away) for your Java Monster sure do add up quick.
- Carpool to work. Team up with a couple co-workers who live near to you and share rides to work. Take turns driving to work to reduce the miles on your car and to save money.
- Buy a bicycle. Riding a bicycle is faster than walking and excellent exercise. Before long, you will find yourself able to ride farther and climb those hills easier; plus, it is good for your heart.
2012 Ford Focus
2012 Toyota Prius
2012 Volkswagon Beetle
28 MPG city
51 MPG city
22 MPG city
40 MPG highway
48 MPG highway
30 MPG highway