why are we paying so much for gas.......when gas companies report a profit of 3.2 billion for the year?

Answer 1

Because everybody else in the world is paying high prices for gas. The current price hike has been caused by the fear of problems in the Middle East. IF Israel’s' war with Hezbollah gets worse, THEN Iran MIGHT enter on Hezbollah's side (Iran formed the terrorist group in 1982). IF Iran gets into the war then they MIGHT cut off their oil supply to the rest of the world, which will cause a rise in prices. It sounds like to many IFs and MIGHTs to me, but that is the real reason behind the increase in oil prices. The problems in Iraq and the recent activity of Hamas have only served to increase these fears.

The British Petroleum oil company is having problems with their pipes, which will slow down the deliver of oil to the West Coast. This is a real problem and it will cause a spike in gas prices. How bad that spike is will depend on how many pipes have to be shut down. The Federal Investigation that has been on going for at least a month claims that BP cut corners, by not testing the pipes as often and cutting down on the anitcorrosion additive used to keep the pipes from corroding on the inside. After a BP pipe created the largest oil spill, on land, in US history the Federal Government started to investigate.

So why don't the other oil companies keep their prices low? Oil and gas are commodities, like pork bellies, gold or corn. It is sold on the commodity and trade market, or in the world market. It is auctioned off just like stocks are on Wall Street. So whoever is willing to pay the highest price gets the oil. The oil companies can’t control the market and set a price, our laws make sure of this. The rules of the Commodities Market are explicit; the highest bidder must get the product. Since the price of oil is higher in Europe, China and Japan these countries are willing to pay more for the oil they need, and they don’t care where it comes from. This is what is driving the gas prices so high. If the oil companies tried to keep their prices down, then the other countries would buy up their product, and the resulting shortage would cause the price to go up.

The actual oil reserves are constant, but the fear and the demand for oil has caused the price spikes. The oil companies are profiting because that’s the nature of a capitalist economy. The government can’t set their rates, and companies have to sell their oil and gas to the highest bidder. Even if there is no actual reduction in the supply, which hasn’t happened until BP’s carelessness was discovered, the market determines the price of the oil. Meanwhile, the actual cost to get the oil out of the ground, ship it and refine it hasn’t changed much. The profit comes from the difference in how much it costs to make the oil and how much it costs to purchase it. That difference is pretty big right now so the profits are record making. If that difference is dropped though then the world market will only drive it higher.

The only thing the government can do is to lay extra taxes on the oil companies to try and make up for this huge windfall. These are the Windfall Profit Taxes and are already in place with the Federal Government getting this tax money. The Federal Government and the State Government also put taxes on the gasoline sold to the public. So the government is making a profit as well. They could give it back to the taxpayers by reducing the taxes on gasoline, but they aren’t. If the Federal and State Governments reduced the taxes they collect from gasoline then it would make the price cheaper and the other countries would run in to try and buy it up. Which would create a drop in the oil and gas supply creating another hike in gas prices.

The only way to get out of this increasing cycle is to break “our addiction to oil.” Americans proved this summer that they are willing to pay more for the gas. This summer was a record year for traveling and vacations. The oil prices have gotten higher, but not high enough to hurt the middle class yet. I am poor, disabled and I can’t work. So I don’t commute to work. The Oil prices have hit me very hard. We are in a record setting heat wave (thanks to global warming) so I need more electricity to cool my home. Most of the electricity in my area is made by burning oil or natural gas; which explains why my electricity bill has. In the United States trucks transport most of the goods; which explains why my grocery bill has gone up 20% as well.

Alternate energy sources are expensive and need more work to develop them. The much vaunted electric hybrid cars are found to use about the same amount of gas as a normal gasoline powered car. If the electric technology were improved, say with lighter batteries, then they would be worth buying. Pure electric cars don’t save a lot of gas, because they are using the energy made by a power plant, usually generated by burning oil. America is the most oil hungry nation in the world. Our demand for oil per person is higher in this country than in any other country. We need to reduce that dependence.

China is a developing country and they are replacing all those bicycles with cars, so their demand for oil is only going to increase. We will probably not see a drop in oil and gas prices. Even if a sudden attack of peace struck the Middle East the demand for oil is increasing and that drives the price. Which only makes the oil companies richer. This same thing happened in the 1970s, and that was a big reason for creating the Windfall Profit taxes. Eventually the price feel, and many adults who remember this are hoping the gas prices will fall again. So they don’t feel the need to conserve, which only makes the prices rise even more. It is a horrible cycle that we can’t escape until we stop relying on oil as our primary source for power.

Answer 2

Well, Kim, a partial answer is because we depend on driving to get to where we have to go and ofcourse Big Oil and the politicians they have bought know it. The Senate and House refused to address the prospect of levying a "wind-fall profits tax" against the oil companies as they did 26 years ago when the oil companies tried to gouge us way back then. (Ted Kennedy have you gotten too old and tired to fight for us Bro?)

That figure you mentioned was not for the year. It was more than that and it was for a quarter of a year!

Twenty-five years ago enough Americans concerved their gas usage to the extent that a glut of oil and gas soon emerged. Big Oil was overloaded with crude and gasoline. A price of a barrel of oil finally fell from around 32 dollars a barrel to just 8 dollars a barrel. I know because I was an oilfield supply salesman at the time. Oil men were committing suicide!

But today we have an oilman in the White House, and the VP was the CEO of the largest oilfield service company in the world, Halliburton. So we are getting it up the old dookie shoot and their not even giving us a break on the price of vaseline. Sorry for being so crude (forgive the pun) but that's the way it is. And I blame us Americans more than anyone. If we would drive less, use our air conditioners less (open a window for crying out loud), turn our thermostats down a notch in winter (put a sweater on), and generally look for ways to save energy, we could bring these outrageous prices down.

But Kim, people are apathetic these days. They seem to care only for their comfort and convenience. Well, someday we well wake up to find that we no longer can afford to go to work, or heat our homes. We will have to give up a lot of even necessisties just to pay for the energy we need.

I hope I have been helpful.

Answer 3

Because money speaks louder than words. And the big oil companies can pretty much pay off lawmakers and government officials to do whatever they want them to (which is why you don't see much investment in alternative energies for example. Only when the oil fields run dry will they really start to go full speed with this, but by then it might be too late).

If you want to make a difference, invest in alternative energies, and create a cheaper, more plentiful, and if possible, cleaner burning fuel that everyone will need. Then watch as the big oil companies either try to buy your ideas (and if they do, sell it for billions), or try to run you out of business (which means gas prices will go really low again, but if they're doing this deliberately to run you out of business, I think they can get in trouble for that, look at Microsoft's anti-trust suit for an example, and I think stuff like this happened about a hundred years ago as well).

So long as oil is cheap, readily available, and everyone needs it, then there won't be much done. Once it the oil runs out (peak oil), or someone comes up with something much better than oil, then you may start seeing alternative stuff come up.

Answer 4

Because our consumer based society as made some really hard choices in the past. Our vehicles could be running on ethanol, but instead we choose oil, hence the big corporations are taking all the profit and screwing the little guy. Our wonderfull government as decided to spend a trillion dollars on Iraq and afghanistan and now Iran by the looks of things just to have control of the middle east for the oil.

Answer 5

It's a mix of things: price gauging, monopolies, foreign dependence of oil, lifestyle dependence on oil, China and India are using more oil now.

Answer 6

Shareholders. You and I complain about the price, but the shareholders are the winners too (consumers who make you think they're upset when they're really not).

Answer 7

GREED.

It's more important to squeeze every penny out of us for their stockholders than to do what's right for the society they exist in.