Why Are Gasoline Prices Constantly Rising in the USA?

by , 03/08/12

Business, Conventional Energy, Energy Business, Energy Economics, Energy Politics, Politics and Policy, 2012 presidential elections, economy, gasoline prices, oil production, United States, rising fuel prices, gasoline prices, keystone xl, why is gasoline so expensive, fuel prices usa

It has never been more expensive to fill up your car. Whether you are in the UK or the US, fuel prices are at an all-time high, but with elections coming up the issue has never been more important. Depending on who you talk to, there are multiple reasons and people to blame. For some, it is the turmoil in the Middle East, for others it is the oil companies and for a certain demographic it is the Obama administration. So who is to blame and what can be done?

Business, Conventional Energy, Energy Business, Energy Economics, Energy Politics, Politics and Policy, 2012 presidential elections, economy, gasoline prices, oil production, United States, rising fuel prices, gasoline prices, keystone xl, why is gasoline so expensive, fuel prices usa

In a report released today by the federal Energy Information Administration, it emerged that for the first time since 1949, the USA exported more petroleum products than it imported. Not just that, but it appears that the rise in fuel prices will continue for the foreseeable future. To quote the report, “during the April through September summer driving season this year, prices are forecast to average about $3.92 per gallon with a peak monthly average price of $3.96 per gallon in May.”

This is going to appal those of you with low mileage vehicles, especially as the current average price for regular-grade gasoline is $3.74 and could go up as high as $5.

Certain Republican senators have proposed the Keystone XL pipeline, but if that was to start construction today, fuel prices wouldn’t drop (even if they did) for years. Plus, that is not even mentioning the environmental impact. However leading Republican politicians, including the Senate minority leader, Mitch McConnell have been quick to blame President Obama for rising costs.

“Over the past few weeks, the American people have begun to feel the painful effects of President Obama’s energy policy. Make no mistake: The rising price of gasoline isn’t simply the result of forces we can’t control,” McConnell was quoted as saying to The New York Times.

While certain candidates have pledged lower gas prices should they become President, industry experts say it is not that easy, even if you do start drilling in areas like the Arctic National Wildlife Refuge in Alaska. Firstly, gasoline prices fluctuate globally. What happens in the US affects what happens in Europe and vice versa. If the US was to access oil reserves in Alaska or other wildlife reserves, it wouldn’t make enough of a difference to lower prices.

According to Jeff Bingaman, who heads the Senate Committee on Energy and Natural Resources, “While domestic oil production plays an important role in the energy security and economy of our own country, its contribution to the world oil balance is not sufficient to bring global oil prices down.” Bear in mind that this includes the fact that oil production in the US outstripped all other major producers from 2008 to 2011.

The fact is that if the US wishes to be part of the global economy, it is going to have to accept that fuel prices are rising globally — not just domestically — and this is due to demand and dwindling resources. While planning to drill in a reserve may sound appealing, it just won’t make enough of a difference.

Speaking about the fuel costs, President Obama said: “There are no quick fixes to this problem, and you know that we can’t just drill our way to lower gas prices. If we’re going to take control of our energy future and avoid these gas price spikes down the line, then we need a sustained, all-of-the-above strategy that develops every available source of American energy — oil, gas, wind, solar, nuclear, biofuels and more.”

That’s one idea. There is another, but it is rather radical – use less oil. However, with our power stations and cars still reliant on the fuel – that is not really an realistic answer.

Via The New York Times

Images: Glenn Batuyong and Paul Lowry

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  1. rwilday April 6, 2012 at 11:03 pm

    The average cost to pull a barrel out of the ground is $80 back in 2008. It is certainly higher now, but I haven’t seen it tabulated yet. At a bit over $100 on the open market, that makes a measly 25% gross margin. Even in highly commoditized markets, 30% gross margins are hoped for. The oil market is an efficient market, but without much higher prices supply will not develop. It is simple economics. Obviously low cost producers are raking it in, but there are plenty of high cost producers, particularly in north america. So, whiners will always find a scapegoat when they haven’t reviewed the economics of oil production.

  2. GreatEmerald March 9, 2012 at 3:50 pm

    Huh, that’s odd, that report doesn’t seem to correlate with their earlier reports, as seen here (the numbers don’t match at all, even though imports are supposed to be exactly the same in both):

    Anyway, yeap, the over-dependence on oil should be stopped. Over here in Europe, we have taxes put on oil, instead of subsidies, and we’re living just fine. Besides, if we are to phase out incadescent light bulbs, why not simply phase out petrol-based vehicles? After all, we can live without oil-based fuels for cars, but we still need oil for a lot more other things – the whole organic chemistry industry depends on it, too, and life without plastics and other similar things would be rather bad, as there are no better alternatives for them.

  3. nillesjm March 9, 2012 at 1:45 pm

    It is ALL OUR faults… We are a consumerist society and I’m not sure people realize that it takes petroleum to get all of our STUFF to us. This includes material objects as well as food and other necessities. We are going to stay dependent on oil if we want to continue this take and trash lifestyle. Buying local instead of from big-box companies and not wasting the stuff we DO have is the only way to solve this problem, or at least start to transition before the oil runs out….

  4. riotgrrl2x March 8, 2012 at 4:27 pm

    I don’t understand how you can not include Stock Market Speculation in this article.

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