Rising Gas Prices
No Room Equals Big Bucks
There are many different elements that contribute to rising gasoline prices. The major cause for increasing gasoline prices has to do with refining capacity. Even if oil were inexpensive, we would still have a problem converting it into the gas that fuels our economy. That is what keeps the gas prices high. When gas supplies are short, due to an “inability to refine crude oil into gas efficiently,” prices increase.
This is a component of supply and demand economics. In a positive aspect, rising gasoline prices do serve a purpose; they curtail usage so that we do not eventually run out of fuel. If gasoline continued to retain its cheap price, despite how much was available, people may pull up to their favorite gas station only to see caution tape around the pumps because frequent consumers would not curtail their consumption. Contrary to what some think, gasoline isn’t the only product refined from crude oil. In his article “Gas Prices Rising”, Matt Rosenberg wrote that, “Only about 51.4% of an oil barrel is used to make gasoline; the rest of the oil is used to make other products such as jet fuel, asphalt, road oil, heating oil and liquefied refinery gas” (Para 3, Rosenberg). This makes oil a high demand commodity around the world and because most countries don’t produce enough oil of their own, they have to import it from other countries that have more than they know what to do with. This also creates a global market in which prices can fluctuate depending on who needs oil and how much. For example, China has a booming economy and requires more oil now than they did in years past. Increased global demand causes a shortage in crude oil supplies which results in higher prices for these commodities (jet fuel, lubricants, gasoline, heating oil). Therefore, the price per barrel of oil increases to curtail demand. This price increase eventually gets passed along to the consumer. As the price for these products increases, fewer
There are many different elements that contribute to rising gasoline prices. The major cause for increasing gasoline prices has to do with refining capacity. Even if oil were inexpensive, we would still have a problem converting it into the gas that fuels our economy. That is what keeps the gas prices high. When gas supplies are short, due to an “inability to refine crude oil into gas efficiently,” prices increase.
This is a component of supply and demand economics. In a positive aspect, rising gasoline prices do serve a purpose; they curtail usage so that we do not eventually run out of fuel. If gasoline continued to retain its cheap price, despite how much was available, people may pull up to their favorite gas station only to see caution tape around the pumps because frequent consumers would not curtail their consumption. Contrary to what some think, gasoline isn’t the only product refined from crude oil. In his article “Gas Prices Rising”, Matt Rosenberg wrote that, “Only about 51.4% of an oil barrel is used to make gasoline; the rest of the oil is used to make other products such as jet fuel, asphalt, road oil, heating oil and liquefied refinery gas” (Para 3, Rosenberg). This makes oil a high demand commodity around the world and because most countries don’t produce enough oil of their own, they have to import it from other countries that have more than they know what to do with. This also creates a global market in which prices can fluctuate depending on who needs oil and how much. For example, China has a booming economy and requires more oil now than they did in years past. Increased global demand causes a shortage in crude oil supplies which results in higher prices for these commodities (jet fuel, lubricants, gasoline, heating oil). Therefore, the price per barrel of oil increases to curtail demand. This price increase eventually gets passed along to the consumer. As the price for these products increases, fewer
Cited: Kyl, Jon. Identifying the Causes of Rising Gasoline Prices. 01 June 2004. Web. 26 Feb. 2012. . Rosenberg, Matt. "Gas Prices Rising." About.com Geography. 05 May 2010. Web. 28 Feb 2012. .