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The next time you’re pumping gas you may want to look away from the meter. Especially the price slot. Filling up a 20 gallon tank on a SUV would cost over $85 with the prices this past week. If anybody sees gas for under $4, please contact the Sentinel offices.
So who is really the bad guy here? It is certainly not the gas stations, which do not have much, if any, control over gas prices. The major oil companies own less than 5 percent of gas stations in the U.S. Small retailers own most gas stations. A number of local gas stations are charging more than $4.50 per gallon for 87 octane, but they are lucky to break even on gas sales.
Most gas stations do not make a profit on their gas. If there is a profit it is not much. After overhead and credit card charges gas stations owners are happy if they did not lose money on gas sales.
Owners of gas stations use gasoline to entice consumers to buy from their convenient store or repair their car at the service station attached to the gas station.
The biggest factor for these outrageous prices is the skyrocketing prices of crude oil, which was only $45 a barrel in 2004. Now the price is a record setting $135 a barrel.
We were complaining earlier this year when prices were in the $3.15 range. Now we are longing for those days. As long as the crude oil prices continue to rise so will the amount that we have to pay to fill up our cars.
So why are crude oil prices so high? It could be the falling dollar, or it could be because of wars in countries that supply oil. Most likely both are to blame.
Oil is priced in U.S. dollars, and the weaker the dollar gets, the more attractive dollar-denominated oil contracts are to foreign investors.
“One of the big problems with gas right now is that the value of the dollar on the world market has dropped nearly 50 percent,” says Rod Wright, who recently won the race for the 25th State Senate district seat. “The barrels of oil are measured in dollars. The fact that the dollar lost its value, that’s almost half of the increase in fuel prices.”
The war on terrorism has become a war on our hard earned money.
“With Bush and his people going around the world causing wars, they are causing wars in the places that also happen to produce crude oil. Markets respond to shortages. If there is a fight in Nigeria, and the flow of crude stops, then that means that the value of the crude in the pipeline will go up as well,” Wright said. “If you suggest that you are going to attack Iran, that the Bush administration has done, and there is a perception that the supply of crude out of Iran will be interrupted, that’s going to drive up the price. The fact that you haven’t had much production of crude oil out of Iraq in the five years that we’ve occupied is driving up the price of fuel.”
Oil rose $2.46 a barrel in one day last month amid reports a ship under contract to the Defense Department fired warning shots at two boats in the Persian Gulf that may have been Iranian. The news raised concerns that a conflict between U.S. and Iranian forces could cut oil supplies from the region.
The spike in gas prices is hitting Californians harder than the rest of the nation. The 63.9-cent tax that we pay is the highest in the nation. Alaska’s 26.4-cent tax is the lowest. The money from the tax is used to build and maintain highways and bridges.
Consumers do not have very many options to lower gas prices. Schemes like not buying gas on certain days or not buying from certain gas stations do not work.
For the time being all we can do is hope that the dollar strengthens and that the wars in the Middle East and other oil producing countries stop.