Economists: Why is petrol (gas) so cheap in America?
474903
Is it really that cheap in America.  I find it very difficult to convert a foreign gas cost due to the difference in monetary value & measurement (gallon vs litre).\n\nIf it is truly cheaper it probably has to do with the fact that we have a lot of powerhouses in the oil industry in our back pockets.  And those that we don't we intend to change by overthrowing their gov'ts.  Truthfully though, in reading up further on it its about the way a gov't is set up:\n\nThe main factor in price disparities between countries is government policy, according to AirInc, a company that tracks the cost of living in various places around the world. Many European nations tax gasoline heavily, with taxes making up as much as 75 percent of the cost of a gallon of gasoline, said a spokesperson for AirInc.
530547
Most anylists are predicting that the currrent price is the peak for the summer and that may drop slightly before the end of summer.\n\nFor info on finding cheap gas go to:\nhttp://www.gasbuddy.com/
354696
People need to conserve energy, like not drive gas guzzling cars and SUV's.  People in Europe do not drive SUV's for the most part so the "I need the extra room" argument does not actually hold true.  Now days oil is not just gasoline like everyone thinks, oil is a key ingredient in: CD's, computers, deodorant, DVD's, dyes, furniture, paint, shampoo, clothing, toothpaste and on and on.  We went through this in the 1970's and nobody learned the lesson then.  Back then they drove gas guzzling cars the energy crunch hit, people bought small cars.  Prices went back down over time then everyone forgot...  Nobody want to drill offshore California, or the east coast or Alaska, all this would help bring on more production so now we have to buy our oil from overseas in unstable countries.  Lets look at refining, nobody wants a refinery in their back yard so those to have been going overseas, meaning we are at other counties mercy there too.  Oil companies are not to blame, we are.  We need to quit thinking we have a right to cheap energy and that it will always be there.  We need to develop alternative sources of energy.\n\nThis country imports over 50% of it oil from other countries.  They have us by the #@*&'s!\n\nLastly, most of what is in the price of gasoline is tax.  Yes that's right tax you can thank your state and the federal govt.  see http://api-ec.api.org/filelibrary/Gasoline-taxes.
517644
I don't want to create a conspiracy theory here - that the gas companies haven't built refineries, so that the supply has remained steady whereas demand skyrocketed, driving up the price...as the companies have seen quarterly profits that are unheard of.  I won't try and say that this was a carefully constructed plot on their behalf, ahem.  Well, ok, I don't think it is but I do think that they've been cheap and that their current plans to expand existing refineries won't solve our problems.\n\nDemand for energy will continue to grow (disproportionately here in the U.S...) and I really believe STRONGLY in seeking alternative sources of energy so that we can not only reduce costs for Americans (costs for living...crude oil costs affect EVERYTHING...prodution, shipping...driving up prices...costs to commute, etc.) but will reduce our dependence on foreign oil - doesn't get much better than THAT!!
611020
As much as I don't like Bush, there isn't much he can do if we want to keep a free market economy.\n\nThe main reason prices are so high is the number of Americans who have bought huge gas guzzling cars.  If you or anyone you know drives an SUV or something similar, there's a big part of your answer.  The US government could levy heftier taxes on people who buy these cars.  And it can raise fuel efficiency standards, which free-marketeers, like the Wall Street Journal, deride as "telling Americans what kind of cars to buy."\n\nDemand is also higher than a decade ago because India, China and other large countries are industrializing at a very fast pace.  There are about 2 billion people in China and India alone.  The factories where they work use fossil fuels.  The cars they want to drive use fossil fuels.  The US government can't control this.\n\nSo demand is through the roof right now.\n\nAnd supply has been crimped by three main factors:\n\n* Speculators are driving up crude oil prices.  The price of crude -- which the US government cannot control -- is the biggest factor in the current price in creases.\n\n* There has been almost no investment in US refinery capacity in about 25 years.  Katrina didn't help.  This means gasoline is in relatively short supply.\n\n* The US Government, in an effort to alleviate foreign oil demand, has mandated the use of additives in fuel to "get more bang for the barrel."  Unfortunately the ethanol they've mandated is in short supply and we have a tarrif on imported ethanol, artificially raising its price.  The gov't could eliminate the tarrif.  The the tarrif is protecting farm states (where the corn is grown to produce the ethanol) as much as big oil.\n\nSo there's little the gov't can do in a short period of time to solve this problem (and I'm not a fan of this administration, so that's hard for me to admit).\n\nBut Americans can do lots more to conserve the stuff, thus driving down the price:\n* Stop buying big gas guzzling cars.\n* Consider walking, biking or public transport.\n* Push for a sensible energy strategy.  Last fall the government talked about tax incentives to big oil to do more drilling.  Now we want to tax their winfall profits.  We should have a policy that gives incentives to deliver tangible alternative, ideally renewable, sources.   Push your congressmen and senators.\n* Push your local communities to add bike lanes and other facilities for bikers (even if you can't cycle, maybe your neighbors can).\n* Push for public transportation.  I live in LA where public transport has been quashed by the rich of the Westside who refuse to allow a subway from downtown and the valley to the beaches because they're afraid of "the wrong kind of people."  But your town might be more open.
296789
First, you need to define 'goes bust'.  Even if the price went really high (say $10.00 per gallon), it would only be transient because: 1) people will adapt their behavior to reduce consumption (we saw this already at $3.00/gal.), 2) many alternative forms of energy will become price competitive, and 3) a lot more oil and gasoline will eventually be found and produced because it will be very profitable to do so.\n\nHistory repeats itself.  We had major fuel/energy crises in the 70's.  In 1979 I paid $1.069 per gallon; after inflation, that is over $3.00 per gal. now. And, my very economical economy car ( a very small 1976 Toyota pickup) got 'awesome' gas mileage of 18 mpg highway!  "Experts" then said there was only enough oil left in the world to last until the mid-90's (ten years ago!).  In the 70's most cars got about 10-12 mpg, now many get TRIPLE that!  Technology will triumph again.\n\nBest wishes!
348889
supposedly it's because of "weapons of mass destruction." but we all know it's because of the oil. the shitty part is now bush has had us over there 3 years, and the fuckin gas prices are still pushing $3 and probably $4 in summer.
674830
Gasoline is the bloodline that keeps America moving. Our personal vehicles alone guzzle 65 billion gallons of gasoline and diesel fuel each year, and that number is projected to increase by 2.6 percent each year. \nTracking gas prices can feel like a roller coaster ride. They're down a little one month, up the next, before shooting up more than 30 percent in a year. Plus, they're different depending on where you look. Other countries, and even other states and cities, can have very different gas prices from your local Gas-N-Go. To the average person, it probably seems as though there's little rhyme or reason to how gas prices are determined. In this article, we will look at the forces that impact the price of gas at the pump, and we'll find out where your gas money actually goes. \n\nAmericans have an insatiable thirst for gasoline, and with sport-utility vehicles (SUVs) continually growing in popularity we are only getting thirstier. Just look at the roads and highways and you'll see that a severe gas shortage would practically cripple the country. Americans drive more than 2.5 trillion miles per year in automobiles, light trucks and SUVs, according to a MEMA report. That's equal to 14,000 round trips to the sun. Today, we drive almost twice as much as we did in 1980 (1.5 trillion miles). \n\n\nPhoto courtesy Phillips Petroleum Company\nA gas station in Colorado Springs, CO\n \n\n\nHistorical Gas Prices\n(Adjusted for inflation)\n \nYear Price Per Gallon \n1950 $1.91 \n1955 $1.85 \n1960 $1.79 \n1965 $1.68 \n1970 $1.59 \n1975 $1.80 \n1980 $2.59 \n1985 $1.90 \n1990 $1.51 \n1995 $1.28 \n2001 $1.66 \n2002 $1.31 \n2003 $1.52 \n2004 $1.79 \n2005 $2.28 \n2006 (so far) $2.68 \nSource: U.S. DOE  \nThe United States consumes an average of 20 million barrels of oil per day (bbl/d, according to the Department of Energy. Of that, about 45 percent is used for motor gasoline. The rest is used for distillate fuel oil, jet fuel, residual fuel and other oils. Each barrel of oil contains 42 gallons (159 L), which yields 19 to 20 gallons (75 L) of gasoline. So, in the United States, something like 178 million gallons of gasoline is consumed every day. \n\nTypically, the demand for gas spikes during the summer, when lots of people go on vacation. Holidays like Memorial Day and the Fourth of July create logjams of tourist traffic during the summer. This high demand usually translates into higher gasoline prices, although that's not always the case. For instance, while gas prices soared 31 cents in April and early May of 2001, reaching $1.71 per gallon (which now seems inexpensive compared to today's prices), prices actually declined during the 2001 summer. \n\nIn 2004, prices continued to rise past the end of the summer travel season for a variety of reasons, including several hurricanes and an increase in the price of crude oil. And in 2005, Hurricane Katrina (along with a sizeable increase in crude oil prices) pushed prices to $3.07 per gallon on September 5, 2005. Prices settled down somewhat in November and December of 2005. But now the numbers are climbing again, with an average price for regular unleaded gas at $2.90 right now (May 2006). \n\nPrice increases generally occur when the world crude-oil market tightens and lowers inventories. We will discuss who controls the crude-oil market later. Also, growing demand can sometimes outpace refinery capacity. In the spring, refineries perform maintenance, which can place a pinch on the gasoline market. By the end of May, refineries are usually back to full capacity. \n\n How do you overpower the pump?\nRising gas prices are impacting everyone: what are you doing to soften the blow?\nWe want to know!  \n\n\nWhen you pump $20 dollars into your tank, that money is broken up into little pieces that get distributed among several entities. Gas is just like any other consumer product: There's a supply chain and several groups who are responsible for setting the price
236826
High Supply, Low demand = Lower Price\n\nLow Supply and High demand = High Price\n\nSimple economics.  Our gas prices work this way too.. Very few refineries to refine gas, which causes lower supplies.
397461
Because all the people who went out and spent a ton of money on a big SUV now have to go out and spend a ton of money just to drive it. Add to that the owners of the new Hummers and you have gas guzzling taken to a new level.  This massive spending by owners of gas guzzlers will prevent any economic downturn.\n\nPoliticians will always blame things on something else, so they will shift the blame for their bad economic policy to increased oil prices, figuring Americans are too dumb and stupid to know the difference.  This is why they get away with $200 million pork barrel spending for a bridge in Alaska, bigger than the Golden Gate, to connect to a remote island where nobody lives.
449895
The simple economic principle of "Supply and Demand". This states that you charge more if it is a more wanted item. If there is a demand of it and a small supply then it is very valuable (like iPods and such) the people will charge you what ever they want because they know you need it. But if there is less demand and doesnt matter how much supply the producers will charge less as a means of selling their item (ie the sales been at store, nobody wants it so they sell it for cheap).\n\nRight now the war is slowing down how much oil can be exported which is making the supply drop. Not to mention that the oil compnies need to turn the crude oil into gasoline which cost money as well.
242160
Gas station owners...Greed mainly.  We have no competition here so we are at the mercy of the few people that own the gas stations.\n\n$2.37 per gallon today. Cheapest grade
550693
Because when it comes to energy, you get it from where ever you can as cheaply as you can.  This is why Bush invaded Iraq after all.  So he can have cheap oil for his Families Oil Companies, so they can sell the oil products to Americans at high prices and become even richer and more powerful than they already are!
471050
Are you people serious? our oil and gasoline is Subsidized by the US government.  While your crying about $3 a gallon for gasoline, Europe is paying upwards of $7 a liter for their petrol.  The government is the only thing keeping you driving the 4X4 and giant SUV, wake up.\n\nEdit: and while your on Yahoo Answers moaning to all of your "friends" about how evil a democracy the US gov't is, they are loosening the restrictions on your car's waste output, and opening the countries fuel supply for personal use so YOU don't have to ride your bike to the mall tomorrow.\n\nEdit2: YES they CAN use the excuse they cannot convert oil->gasoline.  We are currently refining at MAX capacity (when weather systems allow) We havn't made a new refinery since the 70s, and since it take almost 20 YEARS to complete a new refinery, don't hold your breath. (10 years to complete an oil rig)  Also, why the hell would Exon make a new refinery? From a business standpoint, they have NO motivation to do so, they are getting prime price for their product.
1112241
The immediate cause of the soaring gas prices could be attributed to a variety of factors, principal among them is uncertaintly in the middle east.\n\nBut economically speaking, the age of low gas prices is now over. Gas is a fossil fuel which is limited in quantity. Our lifestyle until now has assumed that there is unlimited gas and we have been wasteful in our use of this energy.\n\nThe theory of peak oil posits that the oil being pumped will peak anywhere between 2003 - 2010. What this means is that oil production will peak or has just peaked recently. Going forward over the next decade and ahead oil production will enter a period of slow decline, putting an upward pressure on gas prices.\n\nHubert, an american geologist first applied this theory and developed a model to predict that american oil production would peak somewhere in the late sixties to early seventies, and he was pretty close. After that the model has been applied to world oil production.\n\nThese models assume that there is anywhere between 1.8 - 2 trillion barrels of recoverable oil reserves in the world. After a point, it will become more and more expensive to pump oil out of the ground beyond a point at which it will be economically infeasible to do so.\n\nPeople might tell you that this is cyclical, or temporary, etc. But th e truth is that the era of cheap oil is over. With the developing nations increasing their appetite for oil as well, the rate of consumption is going to increase at an increasing rate.
1118662
Never!Here in Europe gas is about 5.5 $ per gallon. The problem is not the price of gas. The real issue is having a lifestyle that complies with a sustainable environment. So don't ask yourself about the gas-prices.Ask yourself about how much gas you're use compared to how much gas you should be using
936895
You didn't say "Whos" price.\nI suspect you meant the consummer.  But, there's a lot of people and governments which try to get a piece of that dollar you spend on gas(oline?)\n\nThe prime culprits are taxes, commodities speculators, and other countries.\n\nSo the real answer is "whatever the market will bear".\n\nIt makes no difference that oil companies may keep their costs at are below inflation - outside factors are pushing the "price at the pump" to the point where the consumer rebels..\n\n"What I did like in the story is the soundbite (phone interview) they had with the CEO of Exxon, who was quick to point out that they (Exxon) make about 10 cents profit per gallon, while 'big government' (my words, not his) makes at least 4 times that per gallon.".....\n\n"The problem is that NO ONE ever mentions, like I have before, that these billions in profits is only about 8% of their total income. That is actually one of the lowest profit percentages of all industries."