Why does the price of gas REALLY keep going up?

Question

It is true that we are not entitled to cheap gas. However, it seems that the rate of inflation over the last 10 years doesn't seem proportionate. How can it be less than a dollar a gallon in South America and $5 a liter in Europe? I am just looking for someone to offer an explanation that I haven't heard before. Thanks everyone!

Answer 1

The real answer is that the demand for oil is so high and increasing so fast that production cannot keep up. Laws have made looking for more sources and creating production plants a long and expensive process with the net result that production capability is decreasing. In the past, more oil could simply be pumped but now, it would just pile up somewhere unrefined and unusable. Short term spikes like we are currently seeing are generally caused by fear. Investors fear that radical Islam makes oil-based investments too risky so the money for new exploration and infrastructure improvements has to come from prices. Until recently, the oil industry has been in a long term slump resulting in decaying infrastructure and greatly decreased exploration and even with the record profits (gross size is the main factor here) of the past few years, the return to investors is average at best. Prices will continue to rise until the demand for gas again balances with supply. While the prices may not go down (stabilize doesn't necessarily mean returning to what is was), profits will at this point and the cycle will repeat. The good thing is that despite its very apparent problems, this system has proven to work exceedingly better then whenever governments try to control prices and/or nationalize.

Greed does have a part since 50% of the price of gasoline in the USA is due to taxes but government greed goes hand-in-hand with socialism.

Answer 2

Two reasons:

1) There are only a handful of very large gas producers left which has greatly reduced price competition.

2) There's not enough refining capacity to meet the demand for gas. Big oil isn't building refineries. Why should they? They make more money during shortages.

Answer 3

Would some please explain where the world you or I were given the right to cheap gas? Just for kicks walk 30 miles and compare that to $3 for a gallon of gas. Once you make it all the way I'll bet even $5 a gallon will seem cheap.

Answer 4

PURE Greed. I live in an Oil producing State, and brother I feel your pain! The oil companies have an excuse for everything.

Example: Consumers are using more than we can make.
Next year: Consumers cut back their usage so we stopped making as much gas, which is causing a shortage.

Example: Hurricane Katrina no gas
Next year: No Hurricane, retooling our factory's no gas.

Lies, Lies, Lies. Until we can start driving on something that filthy rich people can't get rich on, we will have to deal with this.

My heart really goes out to those families who live on minimum wage. I'm sure hell has a place for those greedy oil tycoons who are making the poor suffer to put meals on the table and get to work. It probably takes 1-2 hours of work to pay for gas depending on how far they have to drive.

Answer 5

Because the Bush/Chaney ticket was backed by big oil. Chaney resigned from Haliburton (with a 31 million dollar severance) to run for office. They are running unregulated because that is what Bush promised them. You can not tell me with Haliburton having the only contract to work on the wells in Iraq that they aren't getting some for nothing and still charging us the same as everyone else. Bush will not step in, because it's his bread and butter. You need a democrat in the White House to pull the reigns back and price freeze these SOBs. They are gouging us for no good reason other than greed.

Answer 6

Where i live in ohio, they say why we're above average is because the local BP refinary is only running at half is capasity and they don't know when it will be running fully. That could be the reason why. Also, they can do really wht they want. If we want the gas, they can make it whatever they want because we'll buy it.

Answer 7

Years ago learned this definition for inflation - It's the marginal propensity to comsume - big energy has become exports improving need while deminishing supply to proving the truth of that definition.

Answer 8

Because we keep buying it regardless of price. We haven't slowed our consumption enough to have an effect that is visible enough that they will stop raising the price.

Answer 9

It's beyond going up. It is ludacris! The station in town went up one dollar a gal in one day.He never sell a drop if he waits for me!

Answer 10

Even though there more than enough reasons to believe it's because of the cost to actually get it, the real deal is that Mr. Bush and his family aren't satisfied just yet until they take your last dime. "send them a truck full of broccoli".