Gasoline Prices

.. price that exist at the pumps.

The demand of crude oil is always cyclical. The United States demands more gasoline in spring and summer months than in the fall or winter, due to people driving more. The current trend in vehicles has moved to larger sport utility vehicles from small economy cars of the past and consume more gas and get less miles per gallon.

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The country is constantly searching for new and more efficient forms of energy. More importantly the country is searching for means of energy that will not make Americans poorer. The following chart shows the price of oil per barrel over the last year. These prices match the increases that take place at the pumps. Countries around the world are hanging on the decision of Iraq, regarding renewal of oil sales. However, the fact remains that if Iraq indeed decides to renew oil sales, will prices really drop? Even if Iraq gets back into the business of selling oil, it would be unlikely to cause a drastic shift in the price of a gallon of gasoline.

Saddam Husseins actions have not been stable in the last few months.Iraq was supposed to begin exporting on Memorial Day, but due to erratic behavior, talks have been put on the back burner. Since there are so many factors involved, even if Iraq exports a tremendous amount of oil, consumers will probably not know the difference. Other factors, other than the demand and price of crude oil in the world effect prices. Several interruptions in The United States production of oil has staggered the countries production. The United States is the only major oil-producing country where oil producing grounds are owned by the land owner and not property of the government.

This makes for inefficient drilling since one party is not completely responsible for gathering all the oil. Average production per well is only 15 barrels per day, far less than any other oil producing countries.Alaska has the best oil producing land, but due to the land and harsh climate, it makes it hard to gather.

It is also very expensive to develop methods of transportation which slows gathering of the oil. Several refinerieson the West Coast, in the East and on the Gulf Coast have experienced operational difficulties which affected product supplies in the marketplace. (4) It is rumored that their are supply tanks buried somewhere near the Gulf of Mexico that could support the country for 66 days if anything were to happen.

The United States and other countries have been looking into alternative forms of energy in order to lower their dependency towards foreign oil. Money is being spent into researching solar, hydro, nuclear, and alternate forms of energy.Government regulations also create changes in gas prices.

California has recently gone threw price increases at the pumps due to new legislation. The state is heavily overpopulated and has the worst smog of all the states. California gas stations are changing to a cleaner gas that will cause less air pollution, but will be more expensive. The increase is approximately 10-12 cents. That is the price Californians are going to have to pay for cleaner air.Another government regulation is aimed towards the refiners of the oil.

The government is putting pressure to change from their winter grades which are oxygenated, to summer grades that have lower evaporability, helping the environment. These costs to switch fuel show up at the pumps, the public has to pay for governmental research and environmental precautions. The United States doesnt have it as bad as some other countries.

The U.S.pays an average of $1.21 per gallon of gasoline.

Japan pays $5.35/gallon, Germany pays $4.04/gallon, The United Kingdom pays $3.38/gallon and Mexico pays $1.55/gallon.

All four are significantly more than the United States pays. Taxes are the largest component of the prices we pay at the pumps. Taxes were the single largest component cost of gasoline, amounting to 42.

4 cents per gallon, including 18.4 cents per gallon in federal taxes, 22 cents per gallon in weighted average state taxes and an estimated 2 cents per gallon in local taxes.(5) The President of The United States of America, Bill Clinton, has on several occasions proposed to increase the taxes put on gas. In 1993 Clinton proposed a gas tax that raised the prices at the pumps by 7.5 cents per gallon, a 6% increase of the price. Then in 1996, Bill Clinton made a proposal to raise gas taxes by an additional 2.5%. Clinton wanted to raise prices 10 cents per gallon overall in his four years in office, all part of his deficit reduction plan.

(6) Clintons entire campaign was based around not hurting the American people with taxes, but once in the white house, has made the record books with the highest amount of gasoline taxes ever. Taxes are so much a part of the prices we pay that in 1981 when pump prices where at an all time high of $2.27 per gallon, the taxes were just 27.7 cents per gallon.The real cost of motor gasoline to consumers fell by about a dollar per gallon between 1981 and 1995, but over the same period federal, state and local motor gasoline taxes increased by nearly 15 cents per gallon. (7) Taxes in the United states have increased an average of 15.6% in the last three years.

mThis chart shows some United States cities and the price increases. Many factors influence the prices of gasoline. Gasoline prices are affected by the price of crude oil in the world market, supply and demand for gasoline, local market competition, temporary supply interruptions, government regulations, or taxes.

Everyday new things can happen to change the prices that American consumers pay at the pumps. The United States is dependent on foreign oil and must continue to ensure stability in the Middle East, or until we have found alternate sources of energy.Taxes will continue to climb due to the rise of government control.

Regulations will continue to become stricter until gasoline usage is more environmentally friendly. It looks as if gas prices will continue to fluctuate, but over time will tend to rise.