Rising gas prices the consequence of global supply and demand
Passing gas stations nowadays is arguably one of the worst parts of driving. The prices seem to only know one direction, and it’s not down. As of Wednesday, March 28, the lowest gas price in Wilkes-Barre could be obtained at US Gas on North Pennsylvania Avenue and Butler Street, and PSC on Main Street with a price of $3.83, according to gasbuddy.com. Nearing $4 a gallon, it is hard to believe that a decade ago, gas was below $1.50 a gallon.
Despite popular belief, gas attendants do not simply wake up in the morning and mess with the numbers in a random fashion. As easy as it may be to put Obama or the oil companies at fault, gasoline prices are really just a function of crude oil prices and economic conditions, along with a few other aspects like weather, refinery closings, and tension in the Middle East.
Crude oil prices are affected by the supply levels in comparison to the current and expected demands for fuel: a simple supply and demand case. For example, the reason why fuel prices shoot up in the spring is in preparation for the summer, when more people travel and the demand for fuel increases.
Other countries like China and India are also depending more and more upon oil every day, and the overall supply is decreasing, even though the global supply of crude oil is expected to be an adequate source for at least 25 years, says the United States Energy Administration.
Weather also affects price, especially major storms that affect oil production. During the mid to late 2000s, gas prices spiked due to the hurricanes in the Gulf of Mexico and floods in the Midwest. Such disasters caused pipeline and operation malfunctions, causing the refineries to shut down.
Taxes, competition between gas stations, and distance from the source may also affect the prices. Essentially anything that affects oil production can cause an increase.
At the end of February 2012, three refineries closed: two in the Philadelphia area (ConocoPhillips Trainer and Sunoco’s Marcus Hook refineries) and one major Caribbean export (HOVENSA’s U.S. Virgin Islands refinery) that supplies much of the East coast, the United States Energy Information Administration released. The EIA warned that such refinery closings could potentially increase fuel prices if supply was endangered.
The only way to bring prices down is to diversify our energy options, which America is currently working on; however, a change like this certainly won’t happen overnight.
So naturally, since Americans have such a problem with the gas prices, you would think they’d be more frugal with their money, right? Wrong. According to a New York Times article based off information from the U.S. Census Bureau, America spends about $40 a week on gas. But surprisingly, rising gas prices had “no significant effect on the consumption of movies, bowling and billiard(s), casino gambling and only insignificant declines for recreational camps, sightseeing, spectator sports and spectator amusements,” states the article. These personal spending habits were observed during a period of high fuel price. Clearly the prices have affected our lives in all sorts of detrimental ways.
Quit whining, America. Life isn’t fair.