Thursday, May 22, 2008

$4 a Gallon - and there is no limit

Nina Wieczorek

Memorial Weekend is coming up and the forecast is for perfect sunny, warm days with temperatures as high as 85° – some forecasts even suggest using this great weather for a scenic drive. But, with gas prices climbing, what is the point of driving around for amusement?

Some people, like student Jamie Breeze, are looking forward to long drives this weekend, even with prices being close to 4 dollars per Gallon, . "I'm going to Hilton Head with the rest of Ohio University." She figures on using 3 to 4 tanks of gas for the trip, divided by four people, but says the costs for this still are too high: "It's a total bummer. It's not fun to have it that way. I was prepared for it, though. I knew it was going to cost me probably $50 to pay for my tank of gas."

Aubrey Chapell, a mom in Athens, talks about how rising gas prices change her family's everyday life.

The latest Data

Drivers might know the latest gas prices in their sleep. But, since not everybody owns a car, let's take a closer look at the latest numbers:
The average retail price of gasoline rose this May in the U.S. from about $3.66 per gallon to $3.84 this week.
In Ohio, prices increased even more: from about $3.62 per gallon in the first week of May, it rose this Monday to $3.90. The year began with the price at nearly $3.21, which is less than it cost at the same time one year earlier (nearly $3.28).
So, within one year the retail gas price in Ohio went up about 62 Cents.
And some people are OK with the new price levels, like Paul Matson. The OU student and a friend also will go on a trip this weekend to Jacksonville, Florida. "I don't mind the hike in gas prices, because I don't have to drive too much. I usually go to the grocery store once a week. So, for me to spend even $100 on gas for one weekend for a trip like this, I am really OK with that."

Are gas prices really too high?

In an international comparison prices in the U.S. still seem to be quite moderate. The latest numbers from last week show, that gasoline retail prices in Europe for example are more than double the price here:
In the U.K. and France retailers have to face prices of about $8.30 dollars per gallon; in the Netherlands, more than $9.50. So, perhaps gasoline is not too expensive, but may have been too cheap until now.

What determines the price?

What actually influences the price of gas? Some people say it could be random decisions made by politicians and oil delivering countries that might even boost the prices on purpose when holidays are close.
Jamie Breeze, for example, can imagine that: "Oh sure. I'm sure they do. I don't see why they wouldn't. They know there is a lot of travel this weekend, so inching up a few more cents puts a lot of dollars in their pockets." Others, on the contrary, have their doubts, like Lisa Moulton, a mother in Athens: "I think they've just been going up steadily and they were up to pretty high before this."

There is more than just one reason for the cost of such global needed resources as crude oil and gasoline:

The U.S. Energy Information Administration says the main factors might be the following:
- A weak US dollar, which is the currency in which crude oil is traded globally,
- A high worldwide oil demand compared to its supply,
- Conflicts in oil producing areas or
- Taxation (fewer taxes = lower prices).

Positive effects of expensive gas

Though it doesn't seem to be true at first sight, there are several positive aspects to gas prices heading up to new records. "Though it is going to be a lot more expensive in the short term, I think in the long term it is going to benefit us a lot more," Paul Matson says.

Student Paul Matson about why high gas prices should stay up.

For example could this encourage the development of alternative, sustainable techniques, which would make people independent of the 'black gold'.
Furthermore, it might force the car industry to start constructing smaller, more efficient cars and encourage customers to buy those smaller vehicles instead of huge gas-wasting trucks, when they are not necessary.
Also the construction of more public transportation could profit from the rising gas prices.
Another factor could be people adopting different habits, like walking or riding a bicycle instead of their car. They might use it more carefully and think twice if it is necessary to take it, so that in the end we simply use less oil.

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