I should probably say, before I delve into the subject of gas prices, that I come from an oil family. My grandfather worked for an oil company. My father works for an oil company. So do my cousin and Aunt. I decided to make my career in another industry that’s hated for providing people with useful and essential products: pharmaceuticals.
Because gas prices aren’t something that we can do anything about. They are driven by market factors that no individual or group of individuals control. Unless you want to pressure the President to nuke China and India, gas prices are going to be high.
Factors that are contributing to high gas prices:
- High crude prices driven by volitility in the nations that provide it. Most world oil producers have shitty governments.
- Demand from China and India driving up demand for existing oil supplies. That’s more than 2 billion people who all want to drive like Americans do.
- Americans love to drive, and they like to drive big cars, and drive them a lot more in the summer.
- Refinery shutdowns around the country that are a result of refiners not doing regular maintenance. Because gas prices are high, the costs of shutting down refinery units is high in terms of lost production.
- We’ve switched from using MTBE as a anti-knock and oxygenating agent to the much more expensive Ethanol. Thanks corn lobby!
- We haven’t built a new refinery in 29 years. Thanks EPA and NIMBYs!
- A patchwork of environmental regulations prevents gas from one area being sold in another. The gas formulation for Philadelphia is different than for Houston.
But if you can find somewhere I can set nuts that would solve all these problems, I’d be willing to chip in.
UPDATE: A lot of folks have brought up the issue of the gasoline tax.Â Getting rid of gasoline taxes, in the short term, would not lower prices.Â In the long term, it would put more profit back into the industry and encourage more resources to be invested in refining and distribution, but over the short term the current price is set by where the supply equals the demand, and tax relief, in the short term, does nothing to increase the supply of gasoline.