Americas Rising Gas Prices: A BIG Problem?

Gas prices are soaring high throughout the world, at this point though Americans are crying out loud; they are unaware of the fact that they are enjoying some of the lowest gas prices as compared to Japan, Germany, and the United Kingdom. Yet this isn’t an excuse. The reason for high gas prices is simply supply and demand in this country, not the cost of barrel of crude oil, be it purchased from Saudi Arabia or elsewhere. The country has not built any new plants (at least any that provided a significant increase to the ability to increase production of refined oil products) since the mid to late 1990s.

Moving a little back to history might help to track down the problems with gas price. Through the 1960s the U.S. was self-sufficient in natural gas and wasted large parts of its withdrawals by venting and flaring. Gas flares were common sights in oilfields and at refineries. U.S. natural gas prices were relatively stable at around 1930s and the 1960s. Prices were reduced to half during the late 1940s, when more than 20 percent of the natural gas being withdrawn from U.S. reserves was vented or flared.

While the effects of flares started to show up during 1990s with repeated spikes in

pricing. As of 2006 the U.S. Interior Department estimated that the Outer Continental Shelf of the United States held more than 15 trillion cubic meters of recoverable natural gas, equivalent to about 25 years of domestic consumption at present rates. Total U.S. natural gas reserves were then estimated at 30 to 50 trillion cubic meters, or about 40 to 70 years consumption.

All these statistics stand meaningless when the current gas prices are consider

ed. Now the main concern is to reduce the prices, though there is not much hope for reduction. Yet some are suggesting a suspension in federal gas tax might help.

Rising gas prices has affected the life of normal people’s life severely; some are a

ctually trying to cut down the use of gas from daily routine. When prices soared past $3.40 a gallon in California last November, demand plummeted 3.7%.

Some analysts see California’s experience as a sign that a plunge in national demand could occur. Still, when summer arrives, demand will rise regardless of how high prices have soared.

This expectation of higher summer demand is boosting gas prices now, but prices

are also rising because refiners are switching over from winter grade gasoline to the more expensive but less polluting fuel they’re required to sell in the summer. That has pulled supplies lower lately as refiners try to sell off all of their winter fuel.

The solution for alleviating effect expensive fuel no more lies in reducing the pr

ice. Thus other modifications are required, like developing more fuel efficient cars is a venture on which

US government is emphasizing. Developing more public transport might prove to be another effective short-term solution.

The increase in fuel price will moreover reflect the price of just about everything. The demand destruction is necessary so people would have to change their ways of doing things. Bu

t whatever said or done price of gas can’t be suppressed anymore, it would generally trend upwards. How sharply remains to be seen. Gas prices will, over the coming years, keep hitting new plateaus where they will stay for a while, then surge up to a new high.  A new level of pain!!

Tags: america, economy, fuel, gas, prices