Why isn’t Gas Cheap Anymore?

Summary: There may be a better way to find cheap gasoline than to drive around your neighborhood watching the gas station signs. Some Internet web sites can help you find cheap gasoline.

A lot of us – most of us – have felt it these past several weeks: that feeling of utter disbelief when pulling up to the pump to gas up our cars. $2.00 a gallon? $2.30? $2.60? $3.00? Higher?! But then there’s that moment when it all comes home: you stand there, pump in hand, watching the numbers fly by. Is it really possible that it’s costing $40, $50, $60 to gas and go?


Sure, gas prices have been high before (remember the mid ‘70s when it seemed like all we did was gas up and then go to the end of the line again?), but when you realize that it’s costing you $10 or $15 to get to work and back and you can’t unload your gas guzzling SUV for love nor money, calling in sick when you’re actually not becomes not just relaxing and devious, but economical as well. But there are many other ways in which recent extreme gas prices are impacting the economy and directly affecting your pocketbook as well. And then there are the big questions: does it really have to be this way and what actions we need to take to change it?

Probably one of the biggest hits some areas will take this year will be due to travel and tourism – or lack thereof.On the other hand, some places don’t expect that the price of gas to have much of an impact on them at all. As of April, Yellowstone National Park didn’t expect much of a tourism hit. While the prices might seem high to residents, to those in major cities – the one’s who flock to the peace and serenity of the great outdoors – by comparison, Montana prices are pretty affordable. Add in tenting in place of hotel prices and you’ve got a downright thrifty vacation.

While gas prices can fluctuate weekly, it seems as if lately they’ve been rising on a daily basis. Between 2003 and 2004 alone they went up more than 30%! Unlike many other developed countries that are smaller and have more extensive public transportation systems, we only have to glance out our window to see the negative impact a gas crunch could have on our economy. What if you couldn’t get to work? What if getting your groceries cost you $5 just to get there and back? And if you have an SUV or one of the larger trucks then the impact is even greater. Americans drive 2.5 trillion miles per year. And we’re not so great about car pooling.

How are these prices set? Supply and demand usually, but not always, plays a part. Summer vacation season cause gas prices to increase simply because they can charge more and we’re willing to pay it. The biggest deciding factor though is crude-oil market. When you belly up to the pump and fill your tank, like every product you purchase your money doesn’t go to just one place. Everyone gets their piece (okay, everyone but you). The largest portion of the tab goes toward the suppliers of the crude-oil – about 45% in fact. Who decides how much that will cost? OPEC – Organization of the Petroleum Exporting Countries.

OPEC is comprised of 11 countries: Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela, and unless you’ve had your head in the sand for the last few years you’re probably aware that our relations with many of these countries is, shall we say, ahem, strained. And as these countries are responsible for supplying the world with more than 40% of the world’s crude, ticking them off and blowing their stuff up hasn’t exactly shown up at the pumps in our favor.

The next biggest chunk of your dough at the gas pump goes to – you guessed it – taxes. While federal taxes are standard at 18.4 cents per gallon, each state can set its own tax on top of that. The lowest in the country is in Georgia at only 7.5 cpg (plus a 4% sales tax) while the highest is Wisconsin with a whopping 32.1 cpg state tax. Federal and state taxes combined make up for about 30% of your total gas bill. Refining costs and profits and distribution and marketing costs and profits make up the remaining percent of the total cost of what makes your car go.

So what’s a driver to do? Well, get a good pair of walking shoes, for one. And there’s been resurgence in biking, so you could dust off your old ten speed. Check into your local public transportation system (imagine: it’ll give you a chance to read that book you’ve been saying you don’t have time for and you won’t be flipping off every stupid driver that cuts you off). But if you’re married to your car then drive the speed limit, carpool, and set a limit to how much gas you’ll consume and try to keep under it.

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