Why Are Gas Prices Too High ?
With rise in gas prices, a common question posed by people is why are gas prices too high. This is a major cause of worry in the US as personal vehicles in the country are responsible for consuming over 140 billion gallons of gas and diesel. While the US is highly dependent on gas, there are many reasons why gas prices in the country are too high. |
The most common cause why gas prices are too high is the increasing demand. This is simple economics. The more the demand increases for a product, the higher it will cost. Today, emerging economies are growing at a fast rate and this spurred an increased demand for oil and gas. India and China are the largest growing economies in the world and there are more than a billion people in each of these countries. The consumers as well as manufacturers are consuming a lot of energy and hence, there is an increased demand for oil. In addition, there is also a demand from developed nations. For example, in the US, it is a common trend to drive large vehicles such as SUVs that tend to consume a lot of gas. In addition, economies in Europe too are growing and this is placing more strain on the oil and gas consumption. It is estimated that in the next twenty-five years, the demand for oil will be a whopping 140 million barrels each day! (See Reference 1)
Traditionally, the Middle East used to be the supplier, while the rest of the world used to be the consumer. However, this trend is changing now with growing economies in the Middle East. Hence, oil producing countries are now concentrating on catering to the rising demand among their people. (See Reference 1)
Besides increase in demand of oil, many supply related problems have also emerged. For example, the ongoing war in Iraq has reduced the oil production in the country; and the rebel problem in Nigeria has also had an adverse effect on production of oil in the country. In addition, in Russia, government is gradually increasing its control over Russian oil companies, while Venezuela, which is a member of OPEC, has nationalized private oil companies. This has created a panic over future supply of oil, and is having an effect on the price of oil. As gas is an oil based product, any increase in oil prices also has an effect on gas prices. (See Reference 1)
In 2005, many of the oil refineries located along the Gulf Coast were destroyed by Hurricane Katrina and Hurricane Rita. This has led to an increase in the cost of refining oil into gas. This increase has been passed on to consumers. In addition, the increase in refining oil has also occurred due to laws passed by the US Congress to force producers to move toward producing gas that is environmentally clean. (See Reference 1)
All these factors have led to the gas prices being too high.
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Why Are Gas Prices Too High
With so many oil spills taking place all over the world and the recent British Petroleum oil spill in the US makes people wonder what is the annual cost of oil spill cleanup. Unfortunately, one cannot answer this question as the actual cost of cleaning up an oil spill varies from one spill to another and is based on a number of factors, like the kind of oil, the location, the technical methods used to clean up the spill, and the characteristics of the area where the spill has occurred.