If you drive your car everyday, you might be wondering: “Why are gas prices so high?” You are not alone because that has been the concern of many car owners for many years.
Blame the high crude oil prices and the level of gasoline demand relative to supply for the incessant increase in retail gasoline prices. The prices of crude oil surge when there is greater demand than supply for it. Greater demand for gasoline across the globe puts much pressure on the available supplies. The competition among local retail gas companies and the seasonal demand for gasoline and other petroleum products cause the fluctuation or the rapid rise of gas prices. The increase in gas prices speed up when the supply of crude oil is disrupted or when there are issues with delivery pipelines and oil refineries.
But even when demand for oil is low, gas prices still go up because of high crude oil costs. For example, gas prices surged in the summer of 2009 despite the economic recession, which reduced the demand for crude oil. The scenario was no different in the previous year. In the summer of 2008, prices of gas went up to $145 a barrel, though the demand and supply for crude oil were balanced.
Why are gas prices so high in 2009? Usually, crude oil prices increase amid concerns about the reduction of oil supply from Iraq and Nigeria and the higher demand for crude oil from India and China. And when the prices of crude oil start to go up, traders bid the prices even higher, resulting in a price surge. Another cause of rising crude oil prices is the waning value of dollar. The 40-percent decline in the dollar since 2003 has pushed oil prices upward because crude oil is comes in dollar denomination.
According to the U.S. Energy Information Administration, two main factors have triggered the surge in retail gas prices since 2009: the relationship between demand and supply and the price of crude oil to refiners. Since 2009, the production and inventories of gasoline (or the supply) have received much pressure relative to demand. This has caused the gas prices to rise because refiners are aiming to increase their profits on gasoline. On the other hand, the prices of crude oil to refiners doubled from the end of 2008 ($30 per barrel) to mid-2009 ($60 per barrel). Such a big leap in crude oil prices has resulted in higher gasoline prices.
Aside from worrying about why are gas prices so high, car owners should also be concerned about what they can do about it. The best way to save on gas and money is to improve fuel economy of a vehicle, which involves cutting down its fuel consumption. The ways to boost fuel efficiency include driving less often, keeping one’s vehicle well-maintained, keeping tires inflated, and driving within the speed limit. In the long run, shifting to alternative fuel vehicles would be an effective way of lowering not only the consumption of gas, but also the gas prices.
