The Price of Oil and Gas
What is the real price of gas?
Is it the price that we pay at the pump? Is it the price that we pay when we have to change our life styles or cut back on the essentials? Are there any alternative fuels that might alleviate the pain at the gasoline stations? Even though everyone agrees that the price of oil and gas is at an all time high, there are alternative fuels that we can use. Research must be conducted to see what can be done to stop these price increases, because the price of gas at the pumps are astounding and the price of food and travel are increasing at an alarming rate. According to the U.S. Environmental Protection Agency (June 2007)… “The fuel economy of US fleet is the lowest in 20 years and Americans continue to travel more.”
The current price of oil and gas is affecting families in the daily decisions they make when it comes to making decisions on what to buy at the supermarket and how much they are allowed to spend. They must make sound decisions on how to spend their money and how much they can save for their future. Today, it is becoming more difficult to keep up with the price of gas. The Energy Information Administration (July 2008) “reports that some of the theories and practices when reporting calculated gasoline product supplied are not accurate. Product supplied for motor gasoline blending components and fuel ethanol most likely reflects unreported blending activity.”
Perhaps, if these blending components were accounted for properly in the audits that are being conducted by this agency; the price of gas would be alleviated somewhat. The processes that are being conducted to find the solution to alleviate paying for these price increases by the American people should be supervised by a government agency.
Some alternative fuels include:
As one can see, there are other alternative fuels out there. Some of them are too expensive to pursue; so research must be conducted to find ways to make these fuels less expensive and more cost-effective to make, here in the United States. The economy is suffering because of these prices, and processes that are not being conducted in the right manner by these fuel companies. The use of alternative fuels in the blending process must be reported in order for these prices to come down. If these fuel companies would just conduct an honest business than all parties involved would be winners. By using additives or blending fuels, the amount of fuel would be larger, and in turn, the consumer would be able to purchase more gasoline.
As it stands, these companies are not passing the savings down to the consumer and that means that the consumer is not able to purchase an adequate amount, which would only increase the fuel company's profits and market share.
Ever wonder why gasoline prices vary from state to state?
The answer, according to Energy Information Administration, Average Monthly Data (2005) is that states that are furthest from the Gulf Coast where the refineries are, tend to have higher prices. Other factors include the state's taxes and the price of the competing gasoline companies and planned and unplanned downtime in the refineries, which slows or stops the process of refining crude oil into gasoline. A perfect example would be when Hurricane Katrina hit the Gulf Coast on August 29, 2005. The refineries took a big loss and demand was high for gasoline but because the refineries could not support the demand, prices would once again rise because; the supply of gasoline had to come from foreign countries. When these fuel refineries have to buy their own supply of crude oil to make gasoline from outside sources, the consumer pays for the refinery's losses and transportation of said crude oil. There are many costs that are associated with refining crude oil into gasoline, and some of them are hidden charges that the consumer is not aware of when purchasing the gasoline.
There are times when gasoline prices fluctuate. One of the times when gasoline prices may rise rapidly is before or during the summer season. These are times when consumers travel more than usual. People travel more during summer vacations with their families. In the past, taking a vacation with the family meant driving days to get to a certain destination.
Now, it is much cheaper to go on a flight instead of driving, even though, airlines are now charging a fuel fee and the airlines are starting to charge for all luggage being taken on flights. Some airlines are starting to charge as much as 20 dollars for a piece of luggage and some are discontinuing the service of snacks on some of their flights. Airlines are probably, making a bad situation worse by cutting these services and having the consumers, once again, pay for their shortfall. These same airlines are also cutting jobs by the thousands. The Associated Press (June 2008 para.1) “reported that United Airlines plans to eliminate about nine hundred and fifty pilot jobs this summer in addition to an already announced one thousand six hundred salaried positions to reduce its fleet.” These difficult but necessary actions must be taken by this airline in order to stay in business and compete with other airlines that are in competition with them. Another situation is filling up the tank in one's car. At four dollars per gallon, a twenty-gallon vehicle will require 80 dollars to fill the tank. Now, if one fills up three times a week, it would add up to 240 dollars a week. That means, that if one works at a minimum wage of six dollars and you work forty hours a week, you earn 240 dollars. How much does that leave a person at this pay rate?
That does not leave this person any choice but to get a second job in order to survive. According to the U.S. Bureau of Labor Statistics (May 2008 para, 2) “the yearly cost of food at home “at the beginning of 2002 for an average family was 3,086 dollars in May of 2008 it is 3,743 dollars, that is an increase of 657.00 dollars for food that is cooked at home”.
“The price of gas for the same household in the beginning of 2002 was 1,279 dollars compared to the price in 2008 which is 4,295 dollars, which is an increase of 3,016 dollars.” These increases are astronomical and are causing families to change the way they live.
A solution according to republicans in a report from (Hargreaves, S. 2008, para 8, 9) is to “push for more drilling off the East and West, and in Alaska.” Meanwhile, the democrats say, “That this will not be the solution, and that the money will be better spent on developing alternatives. We must come together and figure out the right solution to this problem, for the sake of our economy and for this country to continue to be strong.
In this paper, we analyzed the astounding prices of oil and gas and the effect that these prices may have on the American public and identified some possible solutions for the price increases in fuel. We have witnessed a huge change in the way in which we do business, with fuel increases changing the way we travel and the way we live. This development has airlines shutting down some of its operations and the price of food has sky rocketed in the five years. Alternative fuels and the accurate inventories of these blending materials are looked at as a possible solution. Finding a cost-effective way to produce hydrogen is also a possible solution. The topic of oil and gas has republicans and democrats with opposing views as to a solution, with the republicans wanting to drill off shore and the democrats wanting to use the money to look for other alternatives.
We have the opportunity to come together and find the right solution that will protect the environment and the people of this country.
References
U.S. Environmental Protection Agency, June (2007)
Retrieved June 20, 2008, from (http://www.epa.gov/otaq/oms-cmt.htm)
Energy Information Administration
Official Energy Statistics from the U.S. Government
Retrieved June 21, 2008, from (http://tonto.eia.doe.gov/oog/info/twip/twip.asp)
American Coalition for Ethanol
Retrieved June 21, 2008, from (http://www.ethanol.org/index.php)
New York Daily News
Retrieved June 23, 2008, from (http://www.nydailynews.com/money/2008/06/23/200823_united_airlines_cutting_950_pilot_jobs.html)
American Coalition for Ethanol
Retrieved July 10, 2008, from Source: U.S. Bureau of Labor Statistics, May 2008
Consumer Price Index (http://www.bls.gov/cpi/cpid0805.pdf)
And Consumer Expenditure Survey 2000-2006 (ftp://ftp.bls.gov/pub/special.requests/ce/standard/y0006/multiyr.txt)
Hargreaves, S. (2008 para 8, 9) Congress vs. Oil Prices - Round 2
Retrieved July 10, 2008, from http://money.cnn.com/2008/07/09/news/economy/congress_energy/index.htm
