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So can someone please explain to me again why exactly gas prices are so high
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To a lesser extent, supply and demand.
As I've noted before, priced in gold, oil is up 20% over 30 years. Pretty stable price when a fixed supply commodity is used to price it.
Gas is still super cheap. To haul 2000-4000lbs about 20-40 miles with you and 4 guests at $3 is a bargain
For more insight, I really think this guy (Matthew Simmons) is a brilliant investor specializing in the oil markets and doesn't have an environmentalist agenda behind his philosophy, so you get the real skinny on where oil prices might go without the enviro-spin.
So can someone please explain to me again why exactly gas prices are so high
Because YOU will pay it. Not dogging you in particular, but that is the way things work, no? If the price is too high folks will stop buying and the market starts down to the point the stuff will sell again.
And it is not just the US. Works that way on the world market, too. Last I seen published, daily production of oil was something like 82 million barrels. Daily demand was pushing 84 million. Do the math -- price has to go up.
That was 2006. Numbers were worse for 2007. If 2005 was peak for worldwide production . . . things will just get more and more expensive from here on out. Smart thing to do is get off oil and save a ton of money.
The projections I have read is most folks in the US will be "bid out" of the market on a personal level when gas/diesel hits somewhere between $5 a gallon and $10 a gallon. At that point there will still be folks who can afford to pay and play such as government, military, and back-up power generation, so that will keep prices and demand going -- but that is not most of US.
There's multiple reasons why the price of gas has been increasing. I'll just name a couple that people typically don't pay much attention to:
#1 - The value of the US dollar has been dropping compared to international currencies. It thus takes more US dollars to buy 1 gallon of gas today than it did yesterday.
#2 - "Gasoline traders" trade gasoline futures thus the price you pay at the pump fluctuates quickly and violently as you would expect stocks in reaction to economic or manufacturing news of any sort. As with other energy industries the prices rise quickly and although they fall just as quickly at a trader's computer by manipulating the prices at the pump so as to make them come down very slowly instead of real time a lot of extra profit is made.
Accounting for inflation, gas costs about what it did 40 years ago. If the cost of driving was taxed proportionately through a gas tax, (the more you drive, the more you pay) then we would have gas prices like Europe has. Here, gas is subsidized and driving costs, like road construction, maintenance, traffic control, emergency services, are paid by other taxes like property and sales tax. This means that those who can't or choose not to drive help foot the bill.
People talk about "subsidized public transit" like it's un-American. Gas prices have been fixed for so long that we have built our communities around cheap gas and the free market has not had it's affect on prices.
Gas is cheap, we just use too much of it.
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