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Monday, April 4, 2011

Gas Prices are on the Rise

Heres an article for my buddies in the US. Some of you reading this may call it Petrol, but here we call it Gasoline, and in the U.S., we're starting to understand what it feels like to pay out the nose for the most precious fuel that we use every day. Recently, the price for a barrel of light sweet crude oil (The main oil used for automotive gasoline), has started to rise after spending a couple months between $80 and $100 per barrel with the price of a gallon rising to over 3.70 (close to $1 US per liter). Heres the past 3 months gasoline price chart, along with the price of a barrel of crude oil, courtesy of http://www.gasbuddy.com

Many people are up in arms over the gas prices, blaming everything from the President to greedy businessmen. However, the truth makes a lot more sense. Theres three main factors at play here

1: The Middle East: Uprisings and revolutions over the last 4 months have put pressure on many governments in northern Africa and Arabia that regulate the drilling and shipping of oil around Europe, Africa, and Asia, as well as much of the oil exported to the US. This tension has caused insecurity in the prospect of receiving oil, forcing a higher demand to claim oil contracts at lower prices, which in turn drives up the price. When a commodity is threatened, it costs more to secure the shipment of it.

2: Inflation: The value of the U.S. dollar is slowly falling in global markets. Seeing as much of the oil shipped around the world is traded on the U.S. dollar, when its value falls, it costs more for each barrel of oil, pushing prices up. With wages being outpaced by inflationary growth, people aren't going to be making enough money to catch up to price increases, placing pressure on our wallets every time we pull into the gas station.

3: Supply and Demand: more and more economists are becoming smart to the idea of Peak Oil: The idea, nay the fact, that world oil production is or will be peaking soon, and that after this peak, we will no longer be producing enough oil to keep up with its rise in demand. As oil becomes more and more scarce over the coming decades, it will be valued higher and higher, until its either unaffordable, or completely gone. While this  factor is the least considered in day to day trading of oil, its certainly the most certain.

What can we do? Conserve. Drive less often when you don't need to. Walk to the store or to pick your kids up from school. If you have a car that gets less than 20mpg and is over 5 years old, consider upgrading to a newer, more fuel efficient car. The money you spend on increased efficiency can be saved over the long term when you will be thanking yourself for not having to stop so often for gas when the price reaches $4-5 per gallon. Also, try driving 55. Unless you are in a hurry to work and willing to burn the gas, you don't need to rush everywhere. Every increase of 5mph above 55 you drive can chop a mile or two per gallon off your fuel mileage. After all, the EPA mileage estimate for your car is measured at 55mph, so if you drive 65 in a car that is rated for 30mpg you can really only be getting 26mpg, and that can make quite a difference. If we work collectively to lower the demand for gasoline, we can bring the demand down in the markets and hopefully slow the rise of oil prices and not break the bank.

17 comments:

metaphysicalfarms said...

I'm just glad I don't drive anymore. When gas reached $2.50 a gallon I started biking. When gas reached $3.00 a gallon I sold my car.

Bayyy said...

:(

Leestander said...

In sweden we pay 2,23$ / Liter.. and have payed like 1.8-2.43$+ / liter for over a year now..

ironchefman said...

Of course the year that I decide to get a car, gas prices skyrocket. Oh how I miss mass transportation...

Team Panda said...

im definitely conserving, i only use my car now to drive down to my college which is only 3-4 miles away.

ColdFyre said...

I live in the Bay Area of California and the gas station on my corner is at $3.99 a gallon. Needless to say I'm glad I don't have my 40 mile commute any longer.

JuX said...

in australia. For the average Unleaded petrol we pay $1.50+ and our exchange rate is better than America's. Ridiculous.

Waywardly said...

I definitely need to conserve. I just lost my job and don't have much money allocated for gas.

Parallel-Reality Hero said...

Smart guy says: get a bike. At least I'm doing it.

Boskey said...

I started using the public transportation , its not very comfortable but does the job.

paidvacation1605 said...

But wait ............ I CAN'T DRIVE 55!!!!!

Nate said...

i just found a ethanol gas station myself

Joe said...

LOL @ paidvacation. Yes you can drive 55! its better for the environment than blasting along at 70

amBored said...

that'S actually good to know .. but it's not good +followed

Claude said...

It's a good idea to begin thinking about other methods of traveling, the gas prices aren't exactly dropping.

Tibble said...

Travel is vital for me, if I could do it any other way I would. man i'm poor :(

POP! said...

hooray for expensive gas

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