Gasoline Prices on the Rise
In California and Hawaii, gasoline prices have risen to over three dollars a gallon. I have noticed that local gas prices have also been on the rise, but Ohio's gas tax is not as high as California's and Hawaii's and therefore their prices are always higher. Our prices are currently hovering around the 2.55 dollar mark. These high gas prices are a result of the market equilibrium prices. Many people blame the oil companies for the high prices. This may or may not be an accurate statement, but the problem is that there is little that can be done about it. If the government were to try to manage the prices of gasoline with a price ceiling or increased excise tax, it would create a market inefficiency and therefore would would create a large amount of dead weight loss. With this being said, one question comes to mind: What can be done to keep gas prices manageable without creating large market inefficiencies?
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gas prices
2 comments:
Gas Prices are mainly based off the equilibrium price. Oil suppliers supply their oil in hopes of achieving profit and the equilibrium price determines their profit. If the suppliers create more oil than demanded then the price will decrease getting the government involved. In order to keep prices high or at equilibrium the government must make sure there is no surplus of oil. If there is a surplus prices will go down which is bad for suppliers because they will not achieve such a profit. In order to keep gas prices manageable the government must store or burn gasoline to keep the supply closer to equilibrium price.
The price of gasoline is always one of the most issues in the world. Gasoline is necessary in our life. If the price of gasoline increased, it would certainly affect some other of items, such as price of cars, what kind of transportation people would prefer. I know that most of the gasoline in the U.S. is import from other countries. Therefore, why the gasoline prices are different in the different area of the U.S?
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