Why is Gasoline So Expensive?

No question that gasoline prices are ridiculous.  They seem out of control.  Why is this?

Some people blame greed.  “It’s those greedy oil companies,” or “It’s those greedy oil company executives.”  No question that greed is a problem in today’s world.  But not having a way to quantify greed, nor even to verify its existence in an individual (I’m no mind reader: how about you?) makes this a less-than-satisfying response.

Also consider the historic price increase in both crude oil (also see here) and gasoline.  Why the huge increase in the last couple of years if it’s solely due to greed?

Many will point to unrest in places like Nigeria which lead to supply concerns.  That is certainly a short-term factor.  Others point to emerging markets like India and China.  But has their consumption increased so much since 2003 to constitute a five-fold increase in the price of oil, while it had mild fluctuations for over a decade previous?

An interesting article I read pointed out that gas prices now are pretty much up with inflation, plus some minor modifications due to increased demand and hampered supply, along with extra taxes.

But why was oil so cheap for so long, and now so expensive?

Knowing I am a non-interventionist, you may surmise that I will once again put the blame for this problem on the shoulders of government.  And you would be correct in that assumption.

No new domestic refineries have been built since the 1970s.  Exploration and discovery of new oil reservoirs has been restricted since then as well.  Why?  Government regulation strongly discourages refining and exploration for new oil reserves, and prohibits this in many instances.  This tends to hamper supply, especially future supplies.

In 2003, however, we really noticed a huge upswing in oil and gas prices (in the above linked charts, for instance).  I correlate this with the invasion of Iraq.  Even if one supports the questionable moral and ethical premises for invading Iraq, there is the cold, hard fiscal truth about the matter: it is very expensive to keep our troops as a permanent Iraqi occupying force.  And oil prices have risen five-fold since our invasion and associated bellicose threats to Iran and Pakistan.

If you feel the current foreign policy is the way to go for American security, then brace yourself for further increases in gas and oil prices.  Such is the status quo associated with all three mainstream presidential candidates.  Very few substantive foreign policy differences exist.  Yes, Iraq is bandied about as a political football, but in reality, we wouldn’t see much difference.

If you want a change, Ron Paul is my strong recommendation.  He’s still participating in the presidential race.  And he’s still doing pretty well getting his message out.  For me, I am supporting someone I can believe in, and who understands the fiscal, economic, and foreign policy realities we are faced with.

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3 Comments

Filed under fiscal policy, foreign policy, Libertarian, politics, role of government, Ron Paul, Social Commentary

3 responses to “Why is Gasoline So Expensive?

  1. Linda M.

    I believe the people of the United States should indeed unite and strike against these prices. If we stocked up on our food and water and stopped working for two weeks and drove nowhere at all we could stop the oil companies dead in their tracks here is US. Why are we lying down for this robbery?

  2. Cheryl

    I agree and have thought the VERY same thing…if only we could convince all americans to stay home and go nowhere for even just one week…but rich people would break that pattern, to them, high gas prices are no big deal and they would be out and about using gas just the same

  3. Jacqueline B.

    I truly agree that we should boycott oil companies. The only problem is that there is some people who can not take time off work because they could loose there jobs plus not everyone pays attention to what is going on with the news and if a boycott is set up not everyone will participate. I do have to say there is one person to blame and that is our “F” average president Mr. Bush. I guess you really don’t need to be an above average person to run this country into the ground. Its sad to know that Mc Donalds requires more education than the White House. Mr. Bush should really put a stop to this President Bill Clinton sure did.

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