Gas Prices in the United States

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.

In today’s society, everyone seems to be in a rush. Convenience trumps nearly anything and everything. The closest and the promptest option is the one we often lean toward, regardless of the consequence or cost. One of the biggest convenience items within the 21st Century is gasoline. Regardless of the price, we often purchase this item at the most suitable site and time, especially when we are in desperate need of the item. Gasoline companies are alert that convenience is ideal; therefore, they alter gas prices to obtain the greatest amount of business.

Supply and demand is best describes as the varying of prices of a specific service, product or commodity and the desirability for consumers. In theory, the supply and demand model works best for markets that are normally in perfect competition. Now in order for this desired market to work, there has to be a numerous amount of sellers and a numerous amount of buyers that have no real or major impact on the pricing of goods and services. In the follow essay, we will receive a better understand on what the supply and demand really is, further discuss a brief historical perspective on the supply and demand in comparison to the fickle prices of gasoline, go into detail about government involvement in gasoline prices, and finally examine how the supply and demand of gasoline is applicable in our everyday lives.

To begin, I believe it prudent to discuss the macroeconomic considerations of rising gas prices on both the income and substitution effect. As such, a brief but comprehensive introduction will be needed to help make inference concerning consumer behavior. To begin,

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.

Gas prices have been showing an increasing trend for the last few years. This increase has largely affected all the sectors of the economy. The segments of the society which have taken the biggest negative impact of increasing gas prices are the households and businesses (Davidson). This paper focuses on discussing the most significant impacts of gas prices on the economy at the Jersey Shore in the light of recent trends and research studies.

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

I disagree with the opposing statement that Americans are not significantly affected and would not be until something traumatic occurs. I fall in the low-income range of less than $30,000 per year. Many people like me are affected in major ways. According to the U.S. Census Bureau, the three-year-average median household income for all states in 2002-2004 is $44,473 per year. (US Census 2004) Many live paycheck to paycheck struggling to get the bills paid, providing shelter, food and necessities, and still finding enough to enjoy leisurely activities. Not too mention, future and unexpected costs like tuition, car repairs, and medical bills have to be worried about. I have a small, fairly fuel-efficient vehicle I purchased in late 2004, with a 13-gallon tank. With the same driving habits, it now costs me $10 to $18 more per week than it did when I purchased my car. If this increase maintained throughout one year which can be easily assumed according to yearly averages, gas would cost me $520 to $936 per year. The opposing side claims Americans would only be seriously affected if the price rose over $4 per gallon and sustained at least

During the economic crash in 2008 the gas prices were around five Dollars a gallon when two dollars per gallon would’ve been a normal price. How did everyday lives of people change because of this? Well, many people made permanent changes in their lives because of this. A lot of people sold their cars and switched to fuel efficient cars and gave up their happiness and satisfaction of driving big engine SUVs and sports cars.

California has one of the highest gas prices in the United States (Laskoski, usnews.com). However, compared to many developed nations, United States has one of the cheapest gas prices (Hargreaves, CNNMoney.com). Discussion of the reasons gas prices fluctuate is a detailed matter which requires an overview, starting from the extraction of crude oil, chemical processes, regulations, taxes, and gas retail market. The factors that can affect the price at gas station can be categorized into three main categorize including crude commodity prices, technology regulation and taxes, and retail market. As crude oil is the base resource for the production of gasoline (also known as Gas or Petrol, not be confused with Petroleum) its price plays an important

Paul Stephen Dempsey, the Hughes Research Professor of Law and Director of the Transportation Law Program at the University Of Denver College Of Law, takes the speculation on the cost to the ultimate level. Through his collection of data, he shows that although revenue per passenger mile fell at 2.4% (1978-88) compared to 1.7% (1967-77), if the fuel prices are kept constant, the fuel adjusted real yield shows that the prices were falling more rapidly at 2.7% (1967-77) compared to 2.0% (1978-88). These figures proved that consumers were paying more in 1988 then what they would have paid with regulation in effect.

The Energy Information Administration of the Department of Energy began tracking weekly gasoline prices in 1990 by means of a survey of 800 service stations around the country. The average retail price for unleaded gasoline posted its fourth record high during the week of June 12, 2000, increasing 5 cents a gallon to an average of $1.681. The price at the pump is higher than the same period last year by 56 cents and has risen 16.2 cents over the past month (Anonymous, 2000).

Gasoline prices have tended to raise and fall over the course of time. Consumers in my opinion never seem to be worried about if they will be able to afford gasloine. I do admitt that some of them tend o find alternatives when it comes down to getting around town such as, riding bicyles, carpooling and taking public transportation. For some, this still does not deter them from spending money to get to where they are going. Gasoline is a relatively inelastic product, meaning changes in prices have little influence on demand. Price elasticities can be difficult to interpret, as demand can change for reasons beyond changes in fuel price, including changes in other economic factors, demographics, driver behavior, vehicle fuel efficiency, and other

The most important financial problem we are facing today, nearly half of Americans point to energy and gas prices risen day by day or to the high cost of living and inflation. Other problems say a lack of money and low wages, healthcare costs or the cost of owning or renting a home. High gas prices must be forcing Americans to cut back in other ways. Higher gasoline prices mean that each of us will pay more, leaving less to spend on other goods and services. Higher gas prices have an effect on the broader economy.

We all complain about the $4 gasoline prices -- many with good reason. Anyone who works 50 miles from home and gets 20 miles per gallon is using 5 gallons a day, or $20 just for their commute. That means they are spending $100 per week (not tax deductible) just to earn a living for their family.