The recent surge in the cost of heating oil, diesel fuel, and gasoline in the United States has had significant impact on many sectors of the U.S. economy, but most importantly it has had quite a devastating affect on the trucking industry. This is important due to the fact that nearly "70% of U.S. communities rely solely on trucking for their supplies" ("ATA" 23). If the government continues it 's trend of non-intervention and refuses to place pressure on OPEC, the prices will continue to soar well over the two-dollar mark, and cause the trucking industry as a whole to shut down bringing the U.S. economy to a grinding halt. What is the reason that gasoline and fuel prices are so high? Most people believe it is because of OPEC raising …show more content…
This may not seem like a big deal but to the refineries that produce the fuel it is a very big deal because all of their equipment would have to be changed to allow for the "desulphurization" of the fuel. Though the refineries argued against it saying less sulphur would damage engines the EPA upheld their decision. Thus the refineries had to put in new equipment, which in the long run ended up tacking on "an additional $ 3.9 billion to already high fuel costs" ("Cutting Sulphur" 13). One of the industries hardest hit by the fuel cost increase is the trucking industry. Truckers depend on diesel fuel as their lifeblood, without it the rigs and our economy would come to a screeching halt. There is no single affect of high fuel costs on every driver and company; rather there are many varying degrees to which they are all affected. To large companies, it is more of an inconvenience than a problem because they do such a large amount of business that the slight change in the price of diesel is almost negligible in comparison to their revenues. For smaller businesses it is a whole different ballgame. These companies are constantly fighting and working their figures to get business because it is survival of the fittest. Whoever has the lowest rate per pallet or by the truckload is usually the one who gets the contract and with this additional expense for fuel it makes it very difficult to cut a good
High desiel prices are a consequence of capitalism. As all fuel prices have been going up people are blaming the federal govenerment. They believe the president has influence of derterming the outcomes of tensions betwwen Israel and Iran. Some people blame incrased prices based on fears around the world. It all comes down to one thing to blame, capitalism. Calitalism can be great to an economic system because of its emphasis on efficienc and inbradible success rate at allowing those who control the means of production and resources to meet the demands of those with purchasing power. Capitalism is constantly evolveing and will impact the gap between current and future goals on oil prices.
Some of the more obvious differences are the prices for fuel. As of now, March 2011, the price for diesel is significantly higher than gas. Gas is approaching the range of $3.40 per gallon to $3.70 per gallon (depending on what part of the country you’re in, it could be higher than that). Diesel, on the other hand, is nearing $4.00 per gallon and quickly rising. I remember 7 or 8 years ago when diesel was cheaper than gas, and gas was just above $1.00 per gallon.
Despite the real life anecdote described above, a lot of people don't understand why and how gas prices rise and fall. There's an increase in attention to gas prices when they're higher or lower than usual because that directly concerns them as a consumer. Even when gas prices are higher, consumers keep paying because there's not really an alternative out there besides buying a new environmentally friendly car. However, there's currently a much deeper problem in the United States related to gas prices. Today, in particular, gas prices are a lot less than they have been but most Americans brush it off and wonder something along the lines of ""Who is that bad for?"". I mean, fuels costs eat up a large share of earnings in the
There has been some talk about an “oil-extraction tax.” With this tax in place, it would force companies to fork out more of the tax instead of the consumer. If higher taxes are put in place for the producer ultimately they are not the ones paying the higher price the consumer is. Either way producers will receive revenue and in order to do that they will just raise their prices. The demand for fuel is based on necessity forcing consumers to pay outrageous prices because they need it. In addition to the tax, oil companies would have to disclose more information about their supplies and prices. Since the companies have market power, some believe with the tax in place it would reduce the price of the good.
When it comes to the environmental impact that gas and diesel engines have. It turns out that gasoline is more unstable than diesel, not because of what its base consists of, but because of the additives it contains. In addition, vehicles that use diesel tend to be more fuel-efficient and produce less greenhouse gases. Diesel is more environmentally friendly. The United States has what is considered to be the dirtiest diesel, but as of June 1, 2010 this is going to be different. U.S. diesel fuel has a lower measure of ignition quality. This means that when it is cold outside, ignition performance is poor and can result in higher emissions. This is why you see truck drivers idling their trucks all night long in cold weather rather than risk a troublesome start in the mornings. But, the sulfur in the diesel that is emitted during cold ignitions and long engine idling is still harmful to the environment because the sulfurs prevent the control of diesel particulate emissions through diesel particulate filters. This is changing, though, since new advanced technologies such as nitrogen oxide absorbers are being developed to reduce these emissions. As for gasoline, it is the non-aliphatic hydrocarbons as well as carcinogenic additives
1. Have you ever wondered how the things you buy get delivered to the stores? Semis, planes, trains, and sometimes boats. The majority of them run on diesel, because diesel is more efficient than a gasoline engine. With the number of diesels on the road everyday there is a high demand for mechanics that are properly trained to work on them. You have to be able to leave home on a moment’s notice to travel and repair trucks on the road. Being a diesel mechanic is very stressful and you never know what you will be working on day to day.
Each time a person residing in the United States pulls up to a gas station to fill their tank it costs more money. This is particularly true of the past four years. Many focus the blame on the American Government but there are a multitude of factors causing gasoline prices to be so astronomically high. Middle eastern war, environmental precautions and government all seem to have a hand in the price we pay at the pump.
First, the foremost issues at hand are currency and opportunity. Currency and the overwhelming desire for more are the pivotal driving factors in a gasoline and diesel industry. The government receives too much money from these industries to make the adjustments that are necessary. Unfortunately, the government does merely enough to get by. However, Americans need to analyze the opportunities at hand. In the text "Brief Principles of Macroeconomics," author Gregory Mankiw tells us that, " the opportunity cost of an item is what you give up to get that
In 2012, gas reached more than $3.50 per gallon. Today, gas averages have remained around $2.50. What I found most compelling about the pros is with every penny decline, a billion dollars is returned to customers. It is completely astonishing that one cent can have such an enormous impact. Because of the production of oil in America, low fuel cost have allowed Americans to save money and take much-needed vacations. Whether traveling by vehicle or plane, we are all much happier when we get behind the wheels of our vehicles or on a plan due to low fuel costs. On average, households are saving over $700 per year and even more if there are multiple vehicles. Americans were long overdue
The demand of gasoline has increased steadily over the last twenty years. In 1981 the U.S. averaged 6.5 million barrels of gasoline consumption per day. By comparison, in 2004 the U.S. averaged 9.2 million barrels of gasoline consumption per day. For most of this time period, gas prices stayed relatively the same. This is because the U.S. refineries increased their production to meet the demand and maintain the equilibrium price. Also during this same time period worldwide demand for crude oil increased 27%. Crude oil producers also increased their production to meet the demand keeping prices the same.
Drivers realize that the price of gas is tied to the market value of crude oil, and has a direct impact to their daily commutes, errands, and vacations. However the reality is that the price of fuel has implications much grater than most consumers realize. Fuel prices affect nearly everything we purchase. For example, the price of farm commodities and food increase because farmers pay more for the fuel for their farm equipment and trucking firms pay more for fuel to get the commodities to market. These shipping “fuel surcharges” impact all goods
The combination of all these things compiled the cost of diesel, spells out higher overall costs for every single trucking company in the industry. The growth of the freight industry and superior efficiency of railroads will lead to an even slower growth rate for the trucking industry and could be a cause for more concern as the trend continues.
The Economic Factors Involved with the Rising Price of Gasoline The year 2004 has seen a steady climb in the price of gasoline. From January of 2004 to May of 2004 there has been a jump of approximately .50 cents a gallon (Energy Information Administration). For many Americans high gas prices have been a hot issue with them, and there seems to be no rhyme or reason to these fluctuations. With the continued popularity of the sport-utility vehicle and the high volume of gasoline it requires, the issue of high gas prices doesn’t seem to be going away anytime soon.
Starting in 2008, after the nation’s worst economic meltdown since the Great Depression, fuel costs quickly sky rocketed. For the past six years until recently, price per gallon for diesel or gasoline hovered around the three dollars per gallon mark. Because of the nations demand for oil, this was the direct correlation in fuel prices. Over the course of this same time frame a new technology evolved to offset oil prices, hydraulic fracking. While the benefit has been tremendous not only in driving down oil prices, it also has provided huge troves of methane or what industry experts call Natural Gas. Natural Gas per BTU is significantly cheaper than both diesel and gasoline. CNG sales at the station less than two dollars per gallon. These prices have been consistent over the past six
So, what were the reasons that caused the increase in price without the decrease in demand? (Consumers irresponsiveness to price changes / inelasticity of gasoline demand):