questionswhy is gas $3.55/gallon & oil is $105/barrel when…

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The answer is 42 gallons per barrel.

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Could be corporate greed, decreased supply, increased cost of production...some combination of the three and probably other factors.

I think it's safe to say that nearly EVERYTHING is more expensive now that it was 5 years ago though.

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Because the oil company execs are a bunch of greedy bastards.

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refineries switching over to summer formulas soon, recent fire at 1 or more refineries, more and more requirements by various government agencies.
Do you realize that if there's a short supply of gasoline in california, they can't just transport it across state lines from arizona or nevada because it doesn't meet california guidelines? Utterly ridiculous.
Plus, they won't give permits to build new refineries.

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A better question, IMO, is why id diesel more expensive than gasoline? Diesel is less refined, it's cheaper to make. And while the high price of gas hurts us for our daily commutes, the high price of diesel hurts us at every turn; at the grocery store, the clothing store, the computer store, and to some extent even for online purchases.

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@kamikazeken: I agree with all of the above with the inclusion of the ethanol fiasco.

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Check out tax rates too. Gasoline is pretty heavily taxed.

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Inflation of the dollar, this is just the beginning.

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Because the government is owned by the oil companies.

Duh

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I have become pretty convinced that the price of gas is pretty much just running joke for the oil company executives. I think they just have a sick sense of humor. Why else would the price of gas sometimes change by 20 cents in a single day? They're still selling the same gas, they didn't suddenly go back and pay 20 cents more a gallon for it when they bought it. Can't imagine that demand changes that much overnight either. You sure don't see the prices for other items with fairly inelastic demand (like milk) fluctuating this wildly without some really good reason. I am certainly not an economics expert, but I simply can't buy that any of the factors mentioned fully account for these fluctuations, so I am going with Dick Cheney not getting a chance to shoot anybody in the face and needing some other way to get his jollies.

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US is refining more oil than the country is consuming, which means demand for export to China, etc. is rising, which means it's being sold at more of a premium to us than in the past. And the lovely 24 hr a day media isn't helping by rambling on and on about higher prices. They're just enabling the greedy oil companies to charge more without shocking the wallets of American consumers. "Prices coulde raise to more than $4 a gallon." Bam - the news just took the sting out of the sticker shock for all of us and the oil companies do the dance of joy. But don't take my word for it. Go to your favorite web portal (i.e. MSN, Yahoo, or even EDGAR) and read the financial results for yourself and tell me the last time the oil comapanies had an ordinary net operating loss. Like it or not, this country is going to be run by oil until it's all gone.

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It's simple and the biggest problem we face today. GREED.

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No it's inflation. Read a book!

Keynesian economics is dead end street.

I bet the majority of you are so uninformed, that you don't know what Keynesian economics is hahaha

Man it's pathetic.

Americans: care more about football than economic policy.

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It was an election year the Oil companies wanted to keep republicans in office so about 4 months before the election the price dropped about 35- 40% with little or no reason. then 3 months after the election it went back to almost $4

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@iggz: More likely we do know what keynesian economics is so we ignore it.

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@publiclurker: (O.o)?

That make a no sense.

But no, I'd be willing to bet that the majority have no idea what it is.

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@moondrake: There are multiple factors involved. They do have to refine in now a days to produce the Low-sulfur diesel that is required by the government. Another thing that contributes is that about 95% of consumer automobiles in the US are gas so there is less demand for diesel. Also as of 2008 the Federal excise tax on diesel fuel is 6 cents higher per gallon (24.4 cents per gallon) than the tax on gasoline.

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@iggz: Don't be so quick to judge other people. One person cannot know everything. Regardless though, does it really matter what it is?

Short example related to my personal life: I like money, I want more money. The more money I spend, the less money I have. The less money I have and the more money I owe, the worse my situation is. To make the problem better, you increase prices or change demand in some way. Obviously more to it than that, but I would guess 99% of people think similarly.

And to answer your question, I would guess many people that went to college here have heard of that economic theory, but to "normal people", it isn't relevant.

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@iggz: Sorry man, but you are incorrect, when adjusted for inflation, we are paying near record highs for gas. Back in the 90's gas would have been around 1.80-2.00 in today's dollars per gallon. We are fairly close to the record high set in 2008.

http://www.randomuseless.info/gasprice/gasprice.html

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@hackman2007: I can safely say that the majority of people don't understand how the Federal Reserve works or even what it is. They don't understand inflation and how it affects them. They don't realize that the money they work hard for is being continuously devalued which in turn causes higher prices for necessities. I can say this because if they did know what goes on in the background, a lot more people would be pissed off. I want a currency that is actually backed by something, not this fiat BS we currently have.

The Federal Reserve should be shutdown and the people behind it should be tried for treason.

The dollar as it is can't last forever.

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@rockytrh: Yeah, well, inflation isn't the sole reason but it does play a part. A silver quarter in the 80s could have bought you a gallon of gas, a silver quarter today can buy you a gallon of gas plus change.

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@rockytrh: Wouldn't that prove that it's inflation?

Gasoline demand is at the lowest levels in a long while, yet gas prices are higher than ever before.

Gas prices are not rising. The purchasing power of the money used to buy the gas is losing it's value.

Reasons-
1. Oil is traded in dollars world wide. The dollar has declined, hence the reverse relationship to oil means it goes up.
2. Government Regulations
3. Need more gas refineries
4. Taxation on gas

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The Simpsons Already Did It

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According to some people who work in the petroleum refining business, the cost to refine fuel hasn't changed in over 30 years.
BTW, do you realize gasoline is one of the US's biggest exports?

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@iggz: No, that doesn't prove inflation. The chart (using the normalized values) shows how much 1 gallon of gas would cost using today's dollars. Inflation is when we can't buy as much as we could overall, if that were the case, then in 1995, a gallon of gas would have cost us $3.80 in today's dollars. Since it only cost us $2 in today's dollars, that means that the price of gas now is more expensive compared to other things (say a bottle of soda). Basically, you could buy more soda's per gallon of gas in 1996 than you could now.

What i'm trying to say is it is more supply and demand. Demand for gas outside the US has SKYROCKETED over the last decade which is why we see higher prices here.

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@woadwarrior: yeah but the purchasing power of the dollar has changed

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@rockytrh: I understand the chart and I agree that supply and demand definitely plays a huge role, but I don't think you can say that inflation does't play a big role as well.

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There's a lot of factors that go into it.

Money is a big one. You'd think that more refineries would be a good thing, and yet multiple refineries on the east coast are in the process of shutting down for good.

Summer gas is in general more expensive due to higher demand and slightly higher refining standards for summer gas (requirements for a lower vapor pressure that results in some hydrocarbons that are normally fine in "winter gas" needing to be removed from "summer gas"). World events and, more than anything, speculation also play a HUGE role. Know how food prices are going up? A large part of that is due to speculation, and the oil market is just as bad.

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I think many of these answers have missed the real reason, which is that while oil and gas are usually correlated they are not entirely the same thing. The cost of oil only accounts for about half the cost of gas. The other 50% of the cost is attributed to taxes and the distribution of gas. Right now distribution costs are high and so are taxes as compared to before. That outweighs the lower cost of oil reslting in a higher gas price.

Again in short oil and gas aree two different things so basing the price of gas purely on the price of oil is wrong. You must include the cost of taxes and distribution.

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Also keep in mind that if oil execs were truly, truly greedy we as Americans would not have some of the cheapest gas in the world. We pay less than China or India, and only half as much as most of Europe.

I know most people hate to admit it but we could be and should be paying a lot more for oil...