Soaring Gas Prices Leave Consumers Looking for Someone To Blame
From January 2009 until now the price of gasoline at the pump has steadily climbed from $1.80 per gallon to the record-high average of nearly $4.20 today. As Americans reel from the soaring gas prices, the question being asked is: Who do we blame for the spike in gasoline prices?
The U.S. Department of Energy reported last week that gasoline prices at the pump averaged $3.96 a gallon nationwide, up more than eight cents from a week ago. Five states already have record-high gas prices and another 22 states are within 15 cents of record prices. Over the weekend, the price seems to have dropped slightly as the price of a barrel of oil receded on international markets. But, at the start of this week, the price of a barrel of oil again began to climb and the price at the pump is creeping up, too.
Reasons for the rise in oil prices are the subject of debate. There is also a debate as to whether or not the president and Congress can take any steps that would affect the price of oil to give relief to U.S. drivers.
There is one school of thought that argues the price of oil is simply a reflection of international market forces. According to this argument, the main reasons for the high prices are a rise in demand, as the U.S. and global economies continue to recover from the 2008 financial crisis, combined with the recent unrest in oil producing countries such as Libya. This creates pressure on prices from both sides – lower supply and higher demand. In addition, the demand for oil rises with the growth of China, India and other developing countries. With a growing middle class, as world’s poor get a little richer, they buy cars, computers and refrigerators. They want the same things they see the rest of the world enjoying. They burn more fuel to produce and to run them. Rising demand, other things being equal, increases prices.
Add to the mix the recent unrest in Libya and the Middle East and you have a recipe for increasingly higher gas prices. However, not everyone believes this is a simple matter of supply and demand.
U.S. Senator Bernie Sanders recently complained, “The skyrocketing price of gas and oil has nothing to do with the fundamentals of supply and demand, and has everything to do with Wall Street firms that are artificially jacking up the price of oil in the energy futures markets … The same Wall Street speculators that caused the worst financial crisis since the 1930s through their greed, recklessness and illegal behavior are ripping off the American people again by gambling that the price of oil and gas will continue to go up.”
President Obama also recently suggested speculators are playing a role in the rise in prices and has asked for an investigation into the practice. Everyone, including the president, agrees we are too dependent on foreign oil.
Conservatives and Republicans are still crying out that we could solve our dependence on foreign oil if we were simply able to access the oil and natural gas that lies within our own borders. After the Gulf Coast oil spill last spring and summer, it is a more difficult position to sell.
Is the current increase in gas price a function of market forces and therefore unaffected by U.S. energy policies or any actions proposed by the president and Congress, or could a different U.S. energy policy help bring down the price of gas?