This is supposed to be the most joyous time of the year, everything slowing down...so why is gas going up???

Question

I really can't understand why there can be so much less traffic and gasoline going up right here at the Holidays. It's not fair to the average consumer!

Answer 1

There are a variety of reasons as to why fuel prices are going up.

1. The election has passed. The temporary dip in pricing was due to the Republicans realizing that their party has irritated the voting public, and they were trying to remain in power. They were hoping that decreasing prices at the pump would make cash strapped working people vote for them. Either way, no matter who won prices would go back up because the oil companies like their huge profits.

2. Supply and demand. Not all hydrocarbon fuels are converted into gasoline for automobiles. Some people mainly on the East Coast but also the northern midwest use oil to heat their houses. Colder weather increases demand for heating fuel, ergo prices on the oil by the barrel that is refined to make a variety of different fuels goes up because not all crude oil is used to make automotive gasoline.

3. This one is related to #2, however, the crude oil is used for airplane fuel. With increased travel demand, prices for crude oil goes up.

4. China with their gigantic population has a huge demand for oil, whether it is for manufacturing or personal purposes. The more the chinese economy grows and the richer the chinese people become, the more they want a lifestyle like Americas. That means they like their automobiles, however when your population is in the several billions that's still going to equate to alot of crude oil being diverted from the U.S. over to China. Ergo, the people that sell crude oil can charge whatever they feel like and give it to whomever they want too. Usually the highest bidder.

5. This is the one that gets me the most because it artifically creates high prices because the oil companies are too greedy to spend their billion dollar profits to build new refineries. So, they say a refinery in California has been taken off line, ie no crude oil converted into gasoline, so that raises prices right? Wrong, they charge more only because they can get away with it. The oil companies have not built a new refinery in at least the past 10 years and there are not enough refineries in current existence to meet current demand. However, they could easily start production on new refineries especially as President Bush has relaxed environmental regulations on refineries and they have not been policed by the government since the Clinton Era government passed laws to regulate them more closely.

I'm sure I'm missing some other part of the equation, but other than outright greed, and oil being a limited supply in the U.S there really is no other reason for prices to be so high. I have heard government officials say "Well look at europe and their high gas prices." Their high prices are due to all the taxes that the EU levies on petrol. And, should America really lower it's standard of living to meet everyone elses? I personally do not think the people should allow that to happen, but you don't see the current government doing much to ease the pressure on the shrinking middle class.

Answer 2

My personal take is that there are many factors impacting the cost of auto gas at the pump. Some significant ones, such as motor fuel taxes, don't fluctuate day-to-day.
However, there are many factors that do cause prices to fluctuate day-to-day. At the retail end, the two contributing factors are simply quantity demanded and quantity supplied. So, when there is a heavy travel period and quantity demanded increases more than supply could otherwise meet, the price has to increase to discourage discretionary use and avoid shortages. Likewise, if there is a significant refinery, pipeline, or import terminal outage, and retail supply is interrupted and price again has to rise to discourage discretionary use and avoid shortages. In the US, there is not enough of a supply buffer to cushion even small supply interuptions. Also, US consumers are dependent upon auto gas and thus are not very price sensitive in reality... it takes significant price increases to reduce quantity demanded.
Of course, there are also many factors further up the supply chain that impact the long term cost of producing and refining auto gas. The most significant issues are increasing global demand for crude oil coupled with the fact that most of the easy/inexpensive to produce sources of crude in politcally accessible areas has already been produced. New investments in exploration, production, transport infrastructure, and refining are very capital intensive and require long term investments. As long as the politcal risks for production abroad and refining in the US are perceived to be volatile, shareholders for US oil corporations will continue to welcome management that is cautious with new investment.
If you feel that oil corporations make unfairly large profits, you should research the economics of the oil industry and understand the true cost drivers and the cyclical performance of the industry. Alternatively, you could simply invest some money in oil corporation stocks. If you believe that the owners of oil corporations are making unfair profits, then it makes sense that you would want to share in the ownership yourself.

Answer 3

Despite many people's insistence on political motivations for the price of gas, it is influenced primarily by the market. The United States has a continually growing demand for petroleum products and we are not increasing supply to meet it, therefore prices will rise. As it begins to get cold, the natural gas needs rise considerably, and refineries must spend more time and resources for natural gas. No new refineries have been built since 1976 due to environmental activists and the NIMBY sentiment (Not In My Back Yard).

Answer 4

It is going up because the oil companies can make more profit while people travel during the holidays. Haven't you noticed the trends, when holidays or high travel times are coming up, the gas prices start to climb.

Answer 5

A refinery went offline in California. Supplies are tightening and Saudi, along with OPEC are threatening production cuts for December.

Answer 6

They got you used to paying 2 bucks a gallon--then they lowered it--then they got you used to paying almost 3 bucks a gallon--then they lowered it---now they want you to get used to paying 4 a gallon--then they will lower it again for awhile, and so on and so on, until we are paying 6---7 bucks for it. You can thank Bush for this little hike in prices we are enjoying..Neither he nor the oil companies care about the average consumer---All they care about is the almighty BUCK....

Answer 7

Because travel usually picks up this time of year due to shopping for Christmas and people travelling to meet with family for the hollidays.

Answer 8

Why is gas going up? Because the election has passed.

Answer 9

our fossil fuels are running out fast and its so bad on the environment,,,, change to electric car

Answer 10

I agree with Manonthestreet. They can gouge us, why not? It's discouraging.