Understanding the Cost of Gas

Over the past few years, gas prices have been rising and falling at different rates and different times. It has become harder to predict what gas prices will be and how long they will be at that price. Because of this, consumers are finding it difficult to provide funding for gas and are choosing other methods to save on gas, like carpooling, public transportation, walking, or not traveling at all. Many individuals are confused as to why gas prices are becoming unbearable to pay and others are demanding an explanation to why it is taking $50 to fill a smaller tanked car instead of the usual $30 fill-up. Below is an explanation of the cost of gas and all related information that is important to know.

A Brief Background

There are many people in America who are complaining about the cost of gas, but the United States is not the only place suffering from the rising cost of gas. Other countries, like the Netherlands, Germany, Denmark, and Turkey, just to name a few, are suffering from the increase in gas prices, and some of those countries have prices that are higher than the ones in the United States. The taxation done by the government can be held responsible for this rise in an attempt to stop people from using the product. This seems a bit bizarre being that gasoline can potentially be a money-making item because it must be used to operate vehicles and other motorized equipment. However, with the increase in demand around the world, limited supplies, little refining ability, and no new investments in the gasoline market in the Middle East have left gas stations with no choice but to raise the price. Keep reading to learn more about the gasoline crisis.

Just How Did This Happen?

So, how can the cost of gas increase? In America, the average price for just one gallon of gas hit a whopping $3.37 in July of 2012. By mid-September, that price jumped to $3.85 for each gallon. Since then, gas prices have lowered and peaked at about $3.40 per gallon, but if the common trend holds up, those prices are expected to increase within a year’s time. When looking at the cost of gas, you must not ignore the price of crude oil. Usually priced at $2.00 a gallon, the price has shot up to more than $3.50 a gallon within the last few years. Those prices are expected to rise as well because of the following issues:

  • Little pumping power.
  • Little oil supply.
  • A rise in the demand of the product across the globe.
  • Little refining ability.

All countries are demanding more oil for use, which will continue to raise the price of oil. And whenever the price of oil goes up, so does the price of gasoline. As long as there are limited resources for the product and the demand rises, the cost of oil and the cost of gas will continue to increase.

What Will Fix the Issue?

Both the consumer and the government hold the power to fix the problem of the rising cost of gas. The government can lower federal and state taxes to lower the cost of gas. Roughly 19% of the high price of gas is caused by high state and federal taxes. The other half of that percentage is attributed to the distribution of gasoline and its marketing. Taxing profits made by corporations could also decrease the cost of gas. The gasoline industry turns very high profits that if taxed will decrease the price of gasoline. However, at this time, this type of taxation is least likely to occur. The use of alternative fueling options is on the brink of becoming a solution to the gas crisis. Ethanol gas is making its way into gas stations as an option, but the cost of producing ethanol can be pricey.

As a consumer, instead of stressing over the high cost of gas, choose other options when it comes to traveling. There are hybrid cars that are better with gas mileage and will help you save money on gasoline purchase. These fuel-efficient cars may cost a little more to purchase, but the money you will save on gasoline will be well worth the money spent. Some of those cars are listed below:

  • Toyota: Prius, Camry Hybrid, Yaris Hybrid, Corolla
  • Honda: Civic Hybrid, Fit
  • Ford Escape
  • Mercury Mariner
  • Mazda Tribute Hybrid
  • Nissan Versa
  • Scion XD
  • Hyundai Accent

Some other options to traveling could be to purchase a moped, motorcycle, or bicycle. Those items require little or no gasoline to operate. Also, choosing to carpool or take public transportation like the bus, train, or taxi will help keep money in your pockets and out of your gas tanks. Walking and biking will also allow you to exercise and take you to your destination. If you must drive, pay attention to your gas mileage and record how much gas you use throughout your traveling. Keep up with your car’s maintenance as well. The better your vehicle runs, the better it will be on gas.

With the rising cost of gas, it is important to understand why it is happening and develop habits to avoid spending all of your money on filling your gas tanks. When you must buy gas, look for the lowest prices. But if you do not have to use gasoline to get where you need to go, do not spend your money on it.