The US consumed 142 billion gallons of gasolene in 2007 and the revenue enhancement applied on it is 18. 4 cents on one gallon. All around the US. there are around 162. 000 retail gasolene mercantile establishments. With the monetary value of rough oil vibrating about $ 100 a barrel. it is no admiration that concern is turning about the gas monetary values being so high. After all. modern economic systems are kept traveling by this lifeblood. For case. in the United States entirely personal vehicles consume more than 140 billion gallons of Diesel fuel and gasolene per twelvemonth.
However. there are several factors that contribute to the gas monetary values being so high. Given below are a few of them. Increasing Demand for Oil One of the chief accelerators for the ceaseless rise in gas monetary values has been one of the most cardinal economic grounds – the juggle that takes topographic point between demand and supply. Indeed. the demand for oil has ne’er been every bit high as it is these yearss. And one of the chief grounds for this is the go oning rapid economic growing of China and India. the two largest economic systems of the underdeveloped universe.
With a population of over a billion in each of these states. along with an one-year growing rate of 9 per centum in China and 7 per centum in India. both consumers and industries are guzzling up energy at endlessly increasing rates. Plus. there are no marks of any flagging of demand from the industrialised states either. In the United States. for case. people still continue utilizing big vehicles like SUVs. which consume tremendous sums of gas. While the United States is go oning to turn economically. Europe excessively is catching up.
Which implies that there will be even farther demand for oil? Harmonizing to some projections. by the following 25 old ages. the demand for oil is set to travel up to every bit much as 140 million barrels per twenty-four hours. Some of the Middle East states. a part where considerable sums of oil militias are located. hold besides become flourishing economic systems. and therefore the authoritiess there are rethinking the mode in which they have been managing oil supplies. As a consequence. the traditional form of the states of the Middle East being the providers of oil and the states in the West being the consumers has altered.
Thereby adding another component to the equation of supply and demand. which determines the monetary values of gas and oil? Gas Prices affected by Geopoliticss and Supply jobs Along with the demand for oil lifting. many breaks to the supply have created constrictions. For illustration. the war in Iraq has resulted in cut downing oil production at that place. as has besides happened in Nigeria due to arise activity. The go oning atomic arms wrangle with Iran. the authorities increasing its control over industry in Russia. and the oil companies being nationalized in Venezuela has given rise to scruples about future supplies.
In recent old ages. polishing rough oil in the US has besides become more expensive. with experts mentioning two chief grounds for this: congressional authorizations ensuing in switching towards the production of more environmentally clean gasolene blends. and the oil refineries on the Gulf Coast being devastated by Hurricanes Katrina and Rita in the twelvemonth 2005. In add-on. the production of rough oil in America has besides become costlier since the topographic points that have been easiest to bore hold mostly gone dry.
This means that oil companies have to travel progressively into seaward oil bring forthing countries such as the Gulf of Mexico. which cost much more to bore in. With oil companies holding to entree harder to make locations. which makes it costlier to bring forth oil. and at the same time them being forced to cut down their stocks because of demands for doing better usage of resources every bit good as supplying better returns to stockholders. and besides to downgrading new refineries being constructed – all of which has resulted in fastening the supply even as the demand for oil has skyrocketed.
Another combative concern is the ‘peak oil’ theory – the impression that the natural bounds of oil being exploited has been reached in the universe. and that whatever may be the monetary value. there is really small oil left in the land. Even though this construct is mostly dismissed. several states are however get downing to take this factor into history as one of the grounds for lifting gas monetary values. All this is because gas does assist the fuel economic system as it is relatively cheaper than the other fuels that can be used or the fuels that can be used to replace gas.
However. the increasing demand has besides forced the gas monetary values to increase. Reference Buzzle. Com. ( n. d. ) . Why are Gas Prices so High? February 9th. 2009. Retrieved from: hypertext transfer protocol: //www. buzzle. com/articles/why-are-gas-prices-so-high. html Energy Information Administration. ( n. d. ) . Frequently Asked Questions – Gasoline. February 9th. 2009. Retrieved from: hypertext transfer protocol: //tonto. eia. Department of Energy. gov/ask/gasoline_faqs. asp # gas_prices eHow. ( n. d. ) . How to Cover With High Gas Prices and a Sluggish Economy. February 9th. 2009. Retrieved from: hypertext transfer protocol: //www. ehow. com/how_4455540_high-gas-prices-sluggish- economic system. hypertext markup language