why does the price of gas keep rising?

Question

can't the government set some sort of cap on the price?

Answer 1

Send your "Beat Answer" to Washington, they don't have a clue.

Summer driving's increased demand and now, of all times, the refineries do their maintenance.

Just coincidence?

Answer 2

Yes the government can set a cap on the price and we can revisit the fun of the late 70's where you could gas every other day and wait in very long lines for the privlidge.

It's supply and demand that drives the price. Things are basically rationed by cost or by time. Porsches are rationed by cost and healthcare is rationed by time for two easy examples. If you want a Porsche all you have to do is pay for it however if you want healthcare you are entitled to it but you'll wait for hours in an office to get it.

Since the government doesn't own the oil companies and we aren't a communist nation we still respond to the laws of supply and demand. If people start driving less, buying smaller cars or doing other economical things like car pooling the price will fall. If people continue to show lack of concern about the price of gas with their actions it will continue to rise. It's not enough to voice your unhappiness. Prices are designed to motivate you to a certain behavior and if people ignore the motivation it will continue until it is sufficient which, at my estimation, is about $4.50 a gallon.

Answer 3

There are a variety of factors behind the rising price of gasoline. The single biggest factor is the speculative demand and potential for major disruptions around the world. Another important factor is the growth of the automotive market in emerging economies—particularly China. This has increased the demand well above historical trends. In addition, oil companies haven’t invested a lot in building new refineries. It’s been hard for the supply to keep up with the booming demand and on top of that there is instability in Africa, the Middle East and South America, according to J.D. Power and Associates' Forecasting Department. In regard to putting a cap on the price of gasoline, price fixing doesn't work. A good analogy: It’s like trying to dam up the river but then the water keeps building and eventually the dam will burst and create chaos.

Answer 4

It's rising because world oil prices are rising due to increased worldwide demand and because much of the oil comes from troubled regions.

The biggest domestic factor is the limited refining capacity we have. We haven't built any new refineries in 30 years. So while our gas consumption has gone up dramatically with more drivers, more driving per driver, and bigger inefficient vehicles, our ability to meet that demand has not increased. We've also got large oil reserves untapped because the liberals in DC won't let us drill for it.

Any time demand rises but supply does not, price rises.

Yes, the gov't could put a cap on prices, just like they have in the 70s. You may be too young to remember, but because prices were capped, gasoline was simply unavailable at times.

States and locals would adopt schemes like odd /even days, where you could only fill your car if the last number on your plate matched the odd/even date. Or the stations put out green, yellow and red flags. Green meant they had gas, yellow meant they had gas for emergency and business vehicles, and red meant they had no gas period. There were times when you could only find red flags.

Answer 5

I bet you wanted a short, easy answer. Sorry. There isn't one.

Q 1:
1. High demand.
a. Developing countries with improving standard of living continue to have more people with income enough to buy a vehicle, and populations world-wide are not going down.
b. Increasing dependence on petrochemicals in the production of consumer goods (plastics, etc.).
2. Inertia.
a. Market forces that would improve the fleet mileage take a long time to take effect. People do not immediately send their cars to the crusher and buy a new fuel-efficient car when fuel goes up 1% (That would be $0.032 per gallon here). When they do change cars, the one they had does not leave the fleet until it actually dies.
b. Oil-fired power plants have a very long useful life. (Thank goodness. You wouldn't want the cost of building new ones every two years or so added to your light bill.)
c. Product cycles at car companies run three to five years, so designing a more fuel efficient Hummer and getting it to market takes time.
d. The rate at which peoples' habits change (and the infrastructure to accommodate them, like pedestrian-friendly communities, user-friendly public transportation, etc. changes) - walking to the local store, combining trips, carpooling, renting a high capacity vehicle when you need one instead of owning one (with only the driver inside most of the time), and the BIG ONE - Moving closer to your work - is VERY SLOW.
3. Low supply:
a. Just the fear that some event (terrorist sabotage, political extortion, hurricane damage, nationalization of production, monopolistic power play; refinery accidents, maintenance, formulation changes) COULD reduce the daily output of oil world-wide, cause the investors in oil futures to jack the price of a barrel of oil up.
b. Terrorist sabotage, political extortion, hurricane damage, nationalization of production, monopolistic power plays; refinery accidents, maintenance, formulation changes, etc. DO reduce the available supply at various times.
c. There is a finite amount of oil in the world. Sooner or later, we will run out of new oil fields to exploit. Meanwhile, the ones we have don't get any fuller.

Q 2:
Price caps don't work. Look at it from the supplier's point of view. If you had a product that cost you $3.00, would you turn around and sell it for $2.00? No. You'd go somewhere where you could get market value.

The price of fuel may fluctuate downward briefly, but it's not likely to take a downward trend for a while. That will happen only when there is a combination of the effects of inertia being overcome by the realization that changing habits and expensive technology are not just desireable but necessary, and the efforts of innovators, inventors, and scientists result in new technologies and sustainable sources that make oil a secondary source of energy (when oil becomes so expensive that it is profitable to spend the capital on these technologies and sources). "Mr. Fusion," anyone?

Answer 6

The answers you've gotten thus far are good (except for the one that indicated that the President controls gasoline prices. Only in Fantasyland!). I would only add that I don't want the government interfering in free trade and capitalism.

If you ever want cheaper gasoline, vote to have the EPA reined in so more refineries can be built, and support drilling in the ANWAR preserve and the Gulf of Mexico. Until we can relieve ourselves of our dependence on foreign oil (specifically Middle Eastern oil) we are at the mercy of OPEC. You have to do both because right now, even if we had all the oil, we don't have the refining capacity to do anything with it!

Answer 7

Well gas prices are rising everywhere. In the Czech Republic we pay about $4 dollars for a gallon.But the reason I think is that countries want to get richer.Saudi Arabia, the country that exports the most oil every day, is not stupid.They can request any price and the States will have to pay that price.And they can't do anything about it.That's my opinion.

Answer 8

You know, we could all offer up answers based on sound global economic principles, documentation of government interference in private business, corporate reaction to government price caps, and and all the other topics that your question would draw upon, but frankly I don't honestly think that if you ask such a question that you would understand any of the answers.

Answer 9

normally the commodity marketplace is a bubble state. In time with all bubbles, they burst. bear in mind while anybody replaced into making an investment in techs as a results of potential for huge gains, and the thought "the economic cycle replaced into defeated?" What got here approximately? The bubble burst, and is now approximately 40 to 50% from their highs. bear in mind the genuine assets bubble? The bubble burst after anybody and their mom replaced into making an investment into genuine assets and thought genuine assets could desire to on no account circulate down. Now the bubble markets, have lost 20 to 30% of their marketplace fee and counting. the subsequent bubble now is the commodity marketplace. anybody is asserting "OIL AT 200!!! or OIL AT 3 hundred!!!" standard tale, standard ending. Rule of thumb. If anybody says something can basically circulate up. it is going to circulate down and circulate down no longer hassle-free. history has shown this repeatedly returned.

Answer 10

"U.S. lawmakers were skeptical that Big Oil was working hard enough to provide the fuel supplies needed to keep pump prices in check"

"because of tight supplies and strong motor fuel demand"

"The contention that higher prices are driven by market failure or market MANIPULATION, including the holding back of supplies, is not credible," Felmy said.

"refiners' profits last year jumped 39 percent to $24 billion."

"Oil companies earned about $200 billion in excess profits from 2003 through 2006, according to the Consumer Federation of America"

"About 800,000 barrels a day in U.S. oil refining capacity are currently shut, resulting in the loss of about 400,000 barrels a day in gasoline production, according to government energy experts. Normally less than 100,000 barrels a day in oil refining capacity is offline at this time of year."

"Stupak said refiners are earning 70 cents in profits on every $3 gallon of gasoline sold, when energy experts argue about 20 cents is a more reasonable profit margin."

"Felmy higher crude oil prices, not refinery problems, is the main factor behind expensive gasoline. "More than half the cost of gasoline is attributable to the cost of crude oil"

"Taxis and bus drivers chain themselves together symbolically in the middle of one of Panama's main highways in Panama City April 26, 2007 to protest against high gasoline prices. REUTERS/Alberto Lowe (PANAMA) "


So, basically, the answer is because of GREED (profit).
They want to shut rrefineries down but still want to make a large profit. Hell no, its not gonna work that way.