Entry bubble Why Are Gasoline Prices So High?

By: Jake | May 26, 2008 | Category: Money

My post last week about saving money on gas had many of you asking why the price of gasoline was so high. You weren't the only ones.

Congress brought executives from oil companies to Capitol Hill last week and asked them to explain the price hikes. Unfortunately, there weren't too many clear answers. I'm not an oil expert or economist, but in this post I'll try to shed light on why gasoline prices are high.EIA Gasoline Price Chart

The Energy Information Administration (EIA) of the Department of Energy (their job: to provide neutral data regarding energy in the U.S) says the cost of crude oil is the main contributor to the price of gasoline. Crude oil accounts for 70% of the price at the pump. According to the EIA, the spot price of West Texas Intermediate crude oil, which is the U.S. benchmark for light, sweet crude oil, has risen steadily from $101.54 per barrel on March 31 to a record high of $128.93 per barrel on May 20.

The main reason for crude oil's price increase is high worldwide demand. Countries like China (especially with the recent earthquake) have increased their imports of petroleum. Political events and conflicts in oil producing countries also affect the price. What's more interesting is that crude oil is traded worldwide in U.S. dollars and since the value of the dollar is declining, it causes the price of crude to go up.

In the EIA's "This Week in Petroleum" published May 21, they project prices will go up in June and will rise as long as the price of crude oil keeps increasing. The report adds that the usual Memorial Day and summer travel season increase in demand should be lower due to higher prices, but this will not have too much of an effect on price since millions will still travel. Policymakers have proposed lowering or repealing gas taxes, but it's not certain how much this would lower the price.

As long as the price of crude oil continues to rise, we'll be paying more for gasoline. Let's hope gasoline will never cost more than a gallon of beer or ketchup.

| View Comments [21] | envelope E-mail This Entry | Tags: economy   fuel   gas   gasoline   jake   oil   world  

 

Entry bubble Save Gas, Save Money

By: Jake | May 19, 2008 | Category: Money

fuel pumpNext Monday is Memorial Day so many of you will be traveling this weekend. Some will travel by train and plane, but most of you will hit the highway.

If you haven't been living in a secluded area that does not require fuel to live (say a well lit cave), you know that gasoline prices have gone up a lot. It's literally gotten to the point where service stations have to replace old gas meters because they were not built to charge more than a certain amount a gallon.

Let's accept the fact that there is not much you (or we here at Gov Gab) can do to get cheap gas besides researching which station sells the cheapest gas in any location. Once you have paid for your gas, however, there are things you can do to improve your gas mileage and there are things that people say to do (myths) that won't make a difference.

Premium fuel (unless your car requires premium), fuel additives, buying gas in the morning, and changing your air filter generally do not improve your car's fuel use. That information comes from a CNN article where Consumer Reports and Edmunds.com tested six common gas myths. The article did find that inflating your tires and using your air conditioner properly would conserve fuel, but make sure you read the article to see how to do it properly.

There are other effective ways to save fuel that were not mentioned in the article. The Federal Trade Commission offers some tips and Fueleconomy.gov suggests you keep your car tuned up, plan and combine trips and most importantly watch your driving habits. If you really wanted to save money on gas, you could buy or trade in for a more fuel efficient car.

Alright, I've been as thorough as possible but I don't think I've covered every way to save gas. Tell me what you do to conserve gas.

| View Comments [9] | envelope E-mail This Entry | Tags: economy   fuel   gas   gasoline  

 

Entry bubble Where to go when getting gouged at the gas pump

By: Jake | January 28, 2008 | Category: Money

Gas pump
I saw a blog post in the Consumerist the other day about a man getting cheated at the gas pump in Connecticut and it hit close to home.

A gas station I used to go to would always pump gas really slow, but it would ring up the dollars and cents really fast. I thought it was strange and I was right. One day I went there and the Virginia Product and Industry Standards Office had posted notices on a couple of gas pumps stating they failed inspection because they were not properly calibrated.

The Department of Energy (DOE) says you should contact your local authorities and fill out their gas price watch reporting form if you suspect gasoline price gouging or price fixing. The DOE collects this information and then sends it to the Department of Treasury, Department of Justice and State Attorneys General for investigation and prosecution when they think those actions are appropriate.

| View Comments [5] | envelope E-mail This Entry | Tags: gasoline   gouging   jake   price