What Causes the Price Of Gas To Rise?- Topic: gas mileage

 Even though there are issues throughout the world. Has the war on terror has put stress on the United States’ relationship with the Middle East? Why does the killing of Muslim extremists causes the price to sky rocket? Why do we continue to put so much dependency on oil? These questions boggle my mind knowing that we have the capability of pooling our resources and begin to find alternative fuels. The technology is attainable but the public needs to accept alternative fuels.

    Gas prices have been skyrocketing all over the world, but what makes this happen? The first thing we need to look at is how the price of a gallon of gas in generated. The price of gas in April averaged $2.74 per gallon. We need to break down that price to see exactly where most of the cost comes from. The price per gallon is broken down as followed: 17% taxes, 3% distribution and marketing, 26% refining, and 54% is the cost of crude oil. Rising crude oil is a major reason we see a large increase in price at the pump. In January 2005 the price of West Texas crude oil was $50 compared to the price in April 2006 of $70 per barrel. This increase alone can account for $.25 per gallon to the consumer.    Lower gasoline refinement has also contributed to the rise per gallon. This lower production can also be related to mother nature. Hurricanes like Katrina and Rita last year damaged refineries and most are still not up to full capacity. Most refineries still have not reached the capacities pre Katrina and Rita so production of gasoline still remains low.

 Demand for gasoline over the spring and summer still is a major factor for the rise in cost of gasoline. Many people travel with road trips, flying and trains to their favorite vacation destinations.

 Requirements for cleaner burning fuels can also be attributed to the cost of gasoline at the pump. As the government pushes oil companies to help clean up the environment the conversion of mixing some gasoline with eternal has taken a toll.   This is a more expensive gasoline blend and the distribution and conversion of the terminals caused a increase in the price per gallon of gas.

 Taxes change from State to State depending on what the local legislature sets. Most States use the taxes of gasoline to pay for roads and mass transit systems. Mass transit systems help keep vehicles off the roads to relieve congestion. As Marc Fisher writes (2006) in the Washington Globe “Even at $3 a gallon, we have some of the cheapest gas in the industrialized world, primarily because our taxes are so low.” This I guess can be a better way of looking at it. This may prove that our Government is not taxing us like some other countries do. Marc Fisher also writes that $3 per gallon of gasoline has not drastically changed most of our driving and living habits. People seem to find the money to pay for the increase in gas. Interesting enough does this mean that people do make due with what they have? Is the American Society simply distributing money from leisure to necessity or is there enough money to go around? With all these price increase and major contributors to the price what will affect the price in the future? President Bush met with Congress on May 3, 2006 to discuss energy policy. President Bush said talked with Congress on how to deal with America’s energy problem. They talked about how the American people should be treated fairly and to hold companies or individuals accountable if they are not fair to the American consumer. They talked about alternative vehicles like the hybrid. They all agreed that their should be tax credits to anyone purchasing the hybrid vehicles to help relieve gas consumption.  Discussed was the research into alternative fuels like ethanol. The discussion of ways to encourage distribution and production of ethanol based fuels. Vehicles should also be available to run this alternative fuel for consumers. As volume of consumption of this alternative fuel increase then the price and distribution could become even cheaper. New batteries that could run on the first 40 miles of travel on vehicles was also discussed. This would save consumers a lot of gas mileage with the increase in use of these new batteries. They also spoke about new refinery construction to increase the volume in which crude oil can be processed into gasoline. President Bush has also released some reserves of barrel of oils to the consumers. With the release of these barrels the hope is to give the American people some relief at the pump. President Bush has acknowledged that America’s addiction to oil is a matter of national security concern. President Bush has not been without his critics thought. Democratic Senator Schumer accused President Bush of failing to gettough with oil companies. Oil companies delivered record profits in 2005 including Exxon Mobile with $36.1 million dollars. With all these factors that effect the price of gas at the pump. It is clear to see that the Government is recognizing that there is a financial problem in our society. With increase pressure from the US citizens I am sure that the future can be bright for alternative means for travel and lower prices at the pump.