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Why are Gas Prices So High?

Updated on July 18, 2012

© by Jennifer McLeod writing as jenjen0703, all rights reserved.

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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?

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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
$1.52
$2.11
$1.80
Gas prices in Phoenix, Arizona in 2003, according to the FTC (2005). http://www.ftc.gov/reports/gasprices05/050705gaspricesrpt.pdf
  • 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?

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From a Fellow Hubber...

Oil and Gas Prices on the Rise in 2011: Will We See $4 and $5 Gallon Gas Prices?

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
Comparison of three new cars for best fuel mileage

Comments

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    • JenJen0703 profile imageAUTHOR

      Jennifer McLeod 

      6 years ago from Battle Creek, Michigan

      Thanks, LauraGT. I am a single mom, so I am always looking for a way to pinch pennies. Glad the article was useful for you.

    • LauraGT profile image

      LauraGT 

      6 years ago from MA

      Thanks for writing on this important topic. I especially like your tips for saving money on gas. Most of them are good tips for helping the environment too!

    • JenJen0703 profile imageAUTHOR

      Jennifer McLeod 

      6 years ago from Battle Creek, Michigan

      Of course we are! Probably one good reason why our country is in debt.

    • Scott Robertson profile image

      Scott Robertson 

      6 years ago from Las Vegas, Nevada

      I wonder how much we are paying in taxes to be at war with the middle east and then how much of our gas prices are going to pay those in the middle east to fight us. So are we paying both sides to be at war?

    • JenJen0703 profile imageAUTHOR

      Jennifer McLeod 

      6 years ago from Battle Creek, Michigan

      I would love to go back to horses as a means of transportation, but the cities don't like horses and their doo-doo on the streets. If I could ride a horse over a driving car to get around, I would be ecstatic.

    • profile image

      girltalksshop 

      6 years ago

      It is awful...any chance they get, using war or anything like it, such as Iran's latest issue, seems to be what they use to get the hike. Those in big business don't seem to care about the little guy or what may hurt the overall economy. Maybe we should all go back to bikes and horses, huh? Good hub! Voted up and useful. : )

    • JenJen0703 profile imageAUTHOR

      Jennifer McLeod 

      6 years ago from Battle Creek, Michigan

      This spring, I will be walking and riding a bike. But, with kids, I have to have a car, I have one child who lives out of town, and I have to transport him for visitation. Thanks for the vote!

    • profile image

      Sueswan 

      6 years ago

      Hi Jen,

      I don't drive so I rely on public transportation which is much cheaper than paying gas, insurance etc. on a car.

      When it is not cold, I walk to work.

      Voted up and awesome.

    • JenJen0703 profile imageAUTHOR

      Jennifer McLeod 

      6 years ago from Battle Creek, Michigan

      Thanks for the information, Rain Defence. This article has actually educated me, as I am not familiar with prices in the UK and other countries.

    • Rain Defence profile image

      Rain Defence 

      6 years ago from UK

      Sunbeam, I had already factored that into the equation, I know there is a difference between UK and US gallons. The figure I gave is the correct

      figure for a US gallon.

      I could have given the UK gallon figure, but there wasn't much point as that wasn't being used in the first place.

      Minimum wage in UK is £6.08, which works out as $9.62.

    • JenJen0703 profile imageAUTHOR

      Jennifer McLeod 

      6 years ago from Battle Creek, Michigan

      Hi, Bob, thanks for reading my story. I'm hearing from someone in the UK that gas is over $8 a gallon. I am the guilty one of buying the moped and driving it around for the summer. Next year, I'm buying a motorcycle.

    • JenJen0703 profile imageAUTHOR

      Jennifer McLeod 

      6 years ago from Battle Creek, Michigan

      Wow, interesting information. Thanks for reading my story. I did not know that the gallon sizes were different. I figured the price difference might have been in the currency conversion.

    • profile image

      diogenes 

      6 years ago

      Much worse, unbelievably, in Britain: it does keep the traffic snarls down!

      Bob

    • profile image

      sunbeam10 

      6 years ago

      Hi,

      Interesting hub. Just a note for anyone out there comparing prices for UK to USA for instance. You have to take into account that a USA gallon is smaller than a UK gallon so it would naturally cost less anyway.

      I wrote a blog on my website "How to work out your miles per gallon" that explains the differences between the two.

      Wikipedia explains this fully if you type in "gallon."

    • JenJen0703 profile imageAUTHOR

      Jennifer McLeod 

      6 years ago from Battle Creek, Michigan

      Thanks for reading my story jhaggenmiller. I am glad I don't have to spend $8 per gallon of gas, but I sure do miss the good old days of 97 cents a gallon.

      Thanks, too, for the wage information. It will come in handy for another project.

    • JenJen0703 profile imageAUTHOR

      Jennifer McLeod 

      6 years ago from Battle Creek, Michigan

      Thanks for reading my story. I am glad I don't have to pay $8 a gallon for gas, but I sure do miss the days when it was 97 cents a gallon.

      Thanks for the wage information...will be useful for a future hub.

    • jhaggenmiller profile image

      jhaggenmiller 

      6 years ago from Syracuse, NY via Jersey City, NJ

      I echo Rain Defence's info. We are lucky in the grand scheme of things. My wife is from Germany. I was just over there and the price was just under $2 US Dollars per liter! So, right at the $8 per gallon, RD was talking about in the UK.

      And, our gas prices would be so much better if the speculation was stamped out or even curtailed. But, that will never happen.

      And here is the min. wage info from around the world:

      http://en.wikipedia.org/wiki/List_of_minimum_wages...

      Good hub, voted up!

    • JenJen0703 profile imageAUTHOR

      Jennifer McLeod 

      6 years ago from Battle Creek, Michigan

      Wow! That is crazy! I guess the saying is true that when you think you have it bad, someone else has it worse. Also, over here, minimum wage is $7.40 an hour for employment. What is your rate of minimum wage where you live?

    • Rain Defence profile image

      Rain Defence 

      6 years ago from UK

      You are lucky that it's so cheap where you are. I'd be jumping for joy if it was that cheap.

      Your US gallon comes to $3.32 eh?

      Just done some working out. The same amount comes to $8.05 here in the uk. That's nearly 2.5 times more expensive. Count yourself lucky that you pay so little, if I could get it that cheap then I'd be able to travel without even considering fuel costs.

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