Why Are Gas Prices So High?
I hear a lot of people give their theories for why we have such high gas prices. Some are downright funny while others would be funny if it weren’t the people it was coming from. Some educated people who should know better are spewing their own opinions on the reason for the higher gas prices. Here’s the Top 5 Reasons Gas Prices Are High…in no certain order…
1. Speculators/Traders and Fear Mongers (this is a condensed version, but you should get the gist of it)
It seems that those who trade in crude oil are always looking for a reason to trade up the price of crude oil. When crude oil prices go up, so does gas and everything else made from crude oil…plastics, rubber, synthetics, etc. Speculators trade based on whether or not the prices for crude oil will go up or down and then they trade accordingly. If they believe gas prices will be down in 6 months, then they may buy now. If they’re right, they can turn around and sell those contracts for a profit down the road.
Whenever we have a blip on the radar like we’re having now with Iran, the Speculators are betting prices will rise if a conflict breaks out. So the prices rise because traders and others believe what the Speculators say.
Contrary to popular belief, the oil companies do not set the price for their crude oil. Just like Farmers do not set the price for their soybeans or corn and pork producers don’t set the price for their pork bellies.
2. Demand From Emerging Countries
India and China are booming (both in terms of population and economies) and have been for a while while the U.S. is “downsizing” in both. Whenever you have a demand for a product, prices go up. When more and more Indians and Chinese citizens buy cars and homes, the demand for gas and fuel go up in those countries. Now the U.S. is having to compete with those countries for the crude oil.
This is why gas prices normally increases for the Summer. Under most circumstances, there’ll be more people taking long trips in the Summer, thus increasing demand for gas. This increase in demand is speculated in the markets and thus the prices go up before Summer gets here each year!
3. Excessive Government Regulations
Our government makes it hard for a company to drill for oil in oil rich places such as off the cost of our waterfront States. Since they make it harder, this increases the price of doing business and many companies have refused to drill in those oil rich places. Regulations also prohibit companies from drilling in some oil rich areas such as off the coast of Florida and California, not to mention the Tundra of Alaska.
I find it interesting that the Obama administration put the breaks on drilling in the Gulf after the BP incident and stopped issuing new drilling permits. However, Obama invested in a Brazilian oil company that drills just off the coat of Brazil! And guess who’s buying their oil?
4. OPEC
This kinda goes along with the increase demand thing mentioned above. However, since this is an individual organization that regulates the flow of oil from many oil producing countries in the Middle East, I consider them a separate influence.
This organization controls how much oil comes out of these Middle Eastern countries. They can up the amount or decrease the amount of oil. If the up the amount of oil being exported, prices go down. If they decrease the amount, gas prices go up because there is not as much crude oil on the market. To me, they’re artificially controlling the price of oil. And the world lets them!
They have the World by the short hairs and they know it. Until other oil deposits are found that minimizes the OPEC producers effect on the worlds supply of crude, things aren’t going to change much!
5. Attempting To Destabilize The West – and the U.S. Specifically
Okay, I know you probably wasn’t expecting this one. But for a long time I’ve believed that certain countries and/or groups of people have been out to ruin the West, and the U.S. specifically, by inflating the cost of gas. You may think that people in China, India, the Middle East and other places such as Venezuela pay as much as we do. You’d be wrong. Many of those places pay less than 50% what we do. “But how can that be if the market sets the price” I can hear you asking…lol
Simple. Their governments subsidizes the gas prices. Which means, their government pays a large percentage of the cost. Not only are they keeping their citizens in check and complacent, they’re hurting us in the process because the know the U.S. and many other Western countries do not subsidize gas. This also allows them to make products cheaper in their countries than we can in ours….beginning to see the big pictures?
What Can Be Done To Lower Gas Prices?
We must open up closed areas for drilling. It’s as simple as that. When we start producing a lot more oil, then the price will go down. Sure, OPEC and some other countries may try to decrease production to keep the prices artificially high, but there’s a point where they will say “Enough is enough, we’re not going any lower”. They love their money more than the oil and they won’t give the stuff away!
It’s been said that we have vast oil reserves off the East and West coast. And of course you’ve heard of the vast oil reserves in the ANWR of Alaska. But our Government keeps limiting us to where we can drill, and they’re doing it purposefully. I know, some of you may think that it’s just another environmental disaster like the BP fiasco in the Gulf waiting to happen, but your wrong. Ever been to Prudhoe Bay? It’s cleanliness that strikes people when they get there. There are so many regulations that have to be followed there it isn’t funny. In fact, it’s a helluva lot cleaner there than at any Occupy This or That gathering you can find! Yeah, those people are so worried about what big Oil companies will do to the environment that they leave their own areas looking like trash dumps and live in filth. Sure accidents happen, that’s why they’re called accidents. We’ll always have them so we might as well learn from them and stop hamstringing our Country and economy over the few that do happen.
Second, we need to start requiring some payment for helping Iraq and these other countries out. Their payments should be in crude oil and it should be repaid with interest. No exceptions. The same goes for Kuwait. We saved your ass, you repay us for our troubles, in spades because we lost Countrymen helping you!
Third, and this goes along with #1 above, we need to stop hamstringing our oil companies while enabling overseas companies to out compete them for the same oil. But then again, like I’ve already said, this is being done deliberately. Both by inside sources as well as outside sources. Level the playing fields for our companies and they’ll bring the oil home to us.
