Gasoline Prices
So what exactly is making gas prices high? Why have they declined over the last month? There are many things that go into the gasoline price. These factors are both direct and indirect. Some direct factors are amount of oil produced, refining capacity, distribution and marketing, and taxes. Some of the indirect factors include geo-political turmoil, political actions and sanctions, speculation by commodity traders, weather, and energy demands from up and coming countries. The direct factors are pretty well defined. For example, on average 20% or approximately $0.40 per gallon of gas is in taxes. For a view of the breakdown refer to http://www.howstuffworks.com/gas-price.htm. The indirect factors and their exact effects on gasoline prices are harder to nail down. However, these factors are very important when determining why gas prices are high or low. For example, when there is relative calm in oil producing countries, gas prices are usually lower.
What are your thoughts concerning the price of gasoline? How big of an impact do you feel indirect factors have? The government always says the American people deserve cheaper energy and that our current gas prices are outrageous, but have they thought about repealing some of their taxes on the commodity? What do you feel has a larger impact on the price of gasoline direct or indirect factors?
3 comments:
With the whole problem of gasoline, there is a lot of work being done that will help the consumers in the future. For instance, cars are now being made with the ability to get much higher mileage per gallon. But of coarse, with lighter cars comes the higher risk of deaths on the highways. From what I see, most people will take their chances just to save twenty bucks on the average fill-up. Who can blame them? Another big factor for the near future is Ethenol 85 (E85). E85 will help a lot in the polution factor because it is a lot cleaner, so more and more people will be switching to it and will not be relying on oil as much. With these higher prices of gas you would think that people would be staying home a lot more, but it seems that with most people, the benefit of having a car is more that the cost of driving it around. If it was bad enough, everyone could just use a bike and with a smaller demand for gas the price would have to come down. So I say, get on the old bicycle, or stop complaining!
I myself have nothing to worry about. For the next four years I will be relying on my legs pedaling my bicycle around the MC campus. About once a month i will go home and drive around, but ten bucks every month will not bother me any!
I feel that indirect factors have more of an impact than the direct factors becasue the indirect factors can cause a bigger monetary impact than direct factors. The politians can play a huge factor in how much a gallon of gas can cost. Politicians for oil producing states can make it so that alternative energy bills never see the floor due to the politicians tabling the issue. Also individual states place different amount of taxes on gasoline. Some people say that the reason for the decline in the price for a gallon of gas is due to the fact that is is an important elecetion year. I know that the price of gas has hit me hard because everytime I want to go home it cost around $35-$40 just to fill up my tank. I feel that as the proce of gas goes up the amount of people that rely on alternative means of transportation will also increase.
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