Gasoline Prices
The Mystery of Gas Prices
In spring of 2006 rapidly rising gas prices were on everyone’s mind. An article by Horsley (2006) examined the economic and political circumstances behind the rising gas prices. Gas prices are one of the most complex supply/demand relationships in the market. The factors discussed in the article still hold true today and continue to drive gas prices.
According to Horsley, the biggest factors in rising costs are the costs of crude oil and the cost of refining. The price of crude oil accounts or nearly 2/3 the final price of the final gasoline price. When gasoline was at $2.90 per gallon, the cost of crude accounted for $1.60 of the price. Crude rose 33% in 2005, due to political problems that affected the ability of oil producing countries to meet the supply.
Refining costs add approximately another 64 cents to the gasoline price. Refineries in the Gulf of Mexico stopped producing due to hurricanes. Refineries were also incapacitated due to the need to adjust their production to accommodate new requirements for low-sulfur fuel and the phase-out of the gasoline additive MTBE (Horsley, 2006). Taxes add another 55 cents to the price and distribution and marketing costs add another 11 cents per gallon. Big oil companies make most of their money by producing crude oil. There profits today are a result of speculation that took place when prices for crude were much lower (Horsley, 2006).
Oil prices are not set by the oil companies; they are set by the global market. Global demand has increased as countries like India and China become wealthier and more dependent on gasoline. When combined with already high U.S. usage, the demand continues to rise on a global basis. Production is controlled in OPEC countries so that the price can be artificially controlled through regulating supply in comparison to demand. Prices are maintained at artificially high levels, much higher than they would be in a competitive market. Prices are maintained as high as possible, but not so high as to encourage the development of alternatives (Horsley, 2006).
Government Interaction and Gasoline Prices
The U.S. government has interacted with the oil market, perhaps more than any other consumer product. One of the primary methods of intervention has been to encourage the development of alternative energy and more fuel-efficient vehicles (Horsley, 2006). In order to encourage development of these more fuel-efficient cars, the government issues tax breaks for the purchases or hybrid vehicles and fuel-efficient diesel cars (Horsley, 2006).
In addition to encouraging Americans to decrease dependence on foreign oil. The government has conducted investigations concerning alleged “price gouging.” They found that artificial price gouging on the part of gasoline retailers was not the case (Horsley, 2006). The government considered a windfall profits tax to make price gouging unattractive (Horsley, 2006). However, the oil companies fought on the basis that this would limit their ability to invest in new oil fields and refineries (Horsley, 2006).
Government measures regarding gasoline prices at the pump have targeted methods to manipulate supply and demand. They have also focused on making certain that prices are fair and that they are being driven by the capital markets instead of monopolies and oligopolies in the oil industry. Tax measures have focused on encouraging consumers to be more fuel-efficient and to reduce demand. Tax measures against gasoline producers are punitive and intended to prevent unethical practices by them.
The results of these efforts appear to have had an impact on the number of hybrid vehicles being sold and on the purchase of more fuel-efficient cars (Horsley, 2006). Yet, in 2005, demand for gasoline continued to rise (Horsley, 2006). However, the past of demand growth has slowed when compared to previous years (Horsley, 2006). It could not be expected that these measures would have an immediate impact on gasoline demand. Changes are likely to take some time before the real impact is felt. However, this slowing of demand growth is indicative that the process has begun and that it will continue to grow in the future.
Exploring Alternatives
The answer to resolving the issue of gasoline price in the future is the same for both short- and long-term goals. In order to control gasoline prices, supply and demand must be kept in a near-equilibrium state. However, OPEC will never allow this to happen, as this means that they are unable to maximize their profits by using their intricate knowledge of price elasticity and the market. The only reaction that the U.S. government has is to find alternatives to OPEC gasoline and to continue to find ways to decrease U.S. demand. Decreases in U.S. demand would have a major impact on world demand, as the U.S. is a key consumer of gasoline products.
If the government chooses not to intervene, but rather to let the capital markets fulfill their purpose, demand for gasoline products would continue to rise at an alarming rate. If new non-OPEC sources were not found, prices would continue to hover at just below the breaking point of the American consumer. A government effort is needed to jump start initiatives to decrease demand on foreign oils. Whether these efforts concentrate on developing more fuel-efficient cars or developing alternative fuels, the net result must be the reduction in demand for oil products.
Gasoline prices are a complex matter. They are a combination of factors that the government can control and those over which they have no control. The government can make an attempt to encourage Americans to reduce their dependence on foreign oils. They can take steps to make certain that gasoline retailers are not cheating the American customer. However, they cannot control the actions of OPEC and other foreign entities. They can join forces with other international entities, but in the end, it is OPEC who has control over their oil. Taking actions against OPEC can have a negative impact on the stability of relations with those countries that could affect other areas as well. Therefore, these actions can only be undertaken with extreme caution.
The government can take actions to encourage Americans to be more fuel efficient and less dependent on foreign oils, but in the end it is the American consumer that has the most control over the situation. They may be encouraged by government incentives offering tax incentives, but they will make their decisions based on the perceived benefit of their purchase decision in relation to all of the other factors that must be considered.
Government intervention in a capital market in a questionable subject for many economists. There is a concern that if the government intervenes too much, the integrity of the markets will be compromised. However, the government also has an obligation to protect the interests of the people of the United States. Therefore, in some cases, they must intervene to attempt to protect the markets for all. This is the case with gasoline prices.
High gasoline prices can have a devastating impact on other areas of the market. As consumers must channel more of their income into transportation, it leaves less to spend in other areas. This creates an imbalance where the gasoline market outpaces other areas of the economy. The government must take action to protect the whole economy.
References
Horsley, S. (2006). Q & a: What’s Behind High Gas Prices? NPR. Business. 27 April 2006. Retrieved 15 February 2009 at http://www.npr.org/templates/story/story.php?storyId=5365439
Get Professional Assignment Help Cheaply
Are you busy and do not have time to handle your assignment? Are you scared that your paper will not make the grade? Do you have responsibilities that may hinder you from turning in your assignment on time? Are you tired and can barely handle your assignment? Are your grades inconsistent?
Whichever your reason is, it is valid! You can get professional academic help from our service at affordable rates. We have a team of professional academic writers who can handle all your assignments.
Why Choose Our Academic Writing Service?
- Plagiarism free papers
- Timely delivery
- Any deadline
- Skilled, Experienced Native English Writers
- Subject-relevant academic writer
- Adherence to paper instructions
- Ability to tackle bulk assignments
- Reasonable prices
- 24/7 Customer Support
- Get superb grades consistently
Online Academic Help With Different Subjects
Literature
Students barely have time to read. We got you! Have your literature essay or book review written without having the hassle of reading the book. You can get your literature paper custom-written for you by our literature specialists.
Finance
Do you struggle with finance? No need to torture yourself if finance is not your cup of tea. You can order your finance paper from our academic writing service and get 100% original work from competent finance experts.
Computer science
Computer science is a tough subject. Fortunately, our computer science experts are up to the match. No need to stress and have sleepless nights. Our academic writers will tackle all your computer science assignments and deliver them on time. Let us handle all your python, java, ruby, JavaScript, php , C+ assignments!
Psychology
While psychology may be an interesting subject, you may lack sufficient time to handle your assignments. Don’t despair; by using our academic writing service, you can be assured of perfect grades. Moreover, your grades will be consistent.
Engineering
Engineering is quite a demanding subject. Students face a lot of pressure and barely have enough time to do what they love to do. Our academic writing service got you covered! Our engineering specialists follow the paper instructions and ensure timely delivery of the paper.
Nursing
In the nursing course, you may have difficulties with literature reviews, annotated bibliographies, critical essays, and other assignments. Our nursing assignment writers will offer you professional nursing paper help at low prices.
Sociology
Truth be told, sociology papers can be quite exhausting. Our academic writing service relieves you of fatigue, pressure, and stress. You can relax and have peace of mind as our academic writers handle your sociology assignment.
Business
We take pride in having some of the best business writers in the industry. Our business writers have a lot of experience in the field. They are reliable, and you can be assured of a high-grade paper. They are able to handle business papers of any subject, length, deadline, and difficulty!
Statistics
We boast of having some of the most experienced statistics experts in the industry. Our statistics experts have diverse skills, expertise, and knowledge to handle any kind of assignment. They have access to all kinds of software to get your assignment done.
Law
Writing a law essay may prove to be an insurmountable obstacle, especially when you need to know the peculiarities of the legislative framework. Take advantage of our top-notch law specialists and get superb grades and 100% satisfaction.
What discipline/subjects do you deal in?
We have highlighted some of the most popular subjects we handle above. Those are just a tip of the iceberg. We deal in all academic disciplines since our writers are as diverse. They have been drawn from across all disciplines, and orders are assigned to those writers believed to be the best in the field. In a nutshell, there is no task we cannot handle; all you need to do is place your order with us. As long as your instructions are clear, just trust we shall deliver irrespective of the discipline.
Are your writers competent enough to handle my paper?
Our essay writers are graduates with bachelor's, masters, Ph.D., and doctorate degrees in various subjects. The minimum requirement to be an essay writer with our essay writing service is to have a college degree. All our academic writers have a minimum of two years of academic writing. We have a stringent recruitment process to ensure that we get only the most competent essay writers in the industry. We also ensure that the writers are handsomely compensated for their value. The majority of our writers are native English speakers. As such, the fluency of language and grammar is impeccable.
What if I don’t like the paper?
There is a very low likelihood that you won’t like the paper.
Reasons being:
- When assigning your order, we match the paper’s discipline with the writer’s field/specialization. Since all our writers are graduates, we match the paper’s subject with the field the writer studied. For instance, if it’s a nursing paper, only a nursing graduate and writer will handle it. Furthermore, all our writers have academic writing experience and top-notch research skills.
- We have a quality assurance that reviews the paper before it gets to you. As such, we ensure that you get a paper that meets the required standard and will most definitely make the grade.
In the event that you don’t like your paper:
- The writer will revise the paper up to your pleasing. You have unlimited revisions. You simply need to highlight what specifically you don’t like about the paper, and the writer will make the amendments. The paper will be revised until you are satisfied. Revisions are free of charge
- We will have a different writer write the paper from scratch.
- Last resort, if the above does not work, we will refund your money.
Will the professor find out I didn’t write the paper myself?
Not at all. All papers are written from scratch. There is no way your tutor or instructor will realize that you did not write the paper yourself. In fact, we recommend using our assignment help services for consistent results.
What if the paper is plagiarized?
We check all papers for plagiarism before we submit them. We use powerful plagiarism checking software such as SafeAssign, LopesWrite, and Turnitin. We also upload the plagiarism report so that you can review it. We understand that plagiarism is academic suicide. We would not take the risk of submitting plagiarized work and jeopardize your academic journey. Furthermore, we do not sell or use prewritten papers, and each paper is written from scratch.
When will I get my paper?
You determine when you get the paper by setting the deadline when placing the order. All papers are delivered within the deadline. We are well aware that we operate in a time-sensitive industry. As such, we have laid out strategies to ensure that the client receives the paper on time and they never miss the deadline. We understand that papers that are submitted late have some points deducted. We do not want you to miss any points due to late submission. We work on beating deadlines by huge margins in order to ensure that you have ample time to review the paper before you submit it.
Will anyone find out that I used your services?
We have a privacy and confidentiality policy that guides our work. We NEVER share any customer information with third parties. Noone will ever know that you used our assignment help services. It’s only between you and us. We are bound by our policies to protect the customer’s identity and information. All your information, such as your names, phone number, email, order information, and so on, are protected. We have robust security systems that ensure that your data is protected. Hacking our systems is close to impossible, and it has never happened.
How our Assignment Help Service Works
1. Place an order
You fill all the paper instructions in the order form. Make sure you include all the helpful materials so that our academic writers can deliver the perfect paper. It will also help to eliminate unnecessary revisions.
2. Pay for the order
Proceed to pay for the paper so that it can be assigned to one of our expert academic writers. The paper subject is matched with the writer’s area of specialization.
3. Track the progress
You communicate with the writer and know about the progress of the paper. The client can ask the writer for drafts of the paper. The client can upload extra material and include additional instructions from the lecturer. Receive a paper.
4. Download the paper
The paper is sent to your email and uploaded to your personal account. You also get a plagiarism report attached to your paper.
PLACE THIS ORDER OR A SIMILAR ORDER WITH US TODAY AND GET A PERFECT SCORE!!!
