At an average price of about $4 per gallon, Americans are paying more for gasoline than ever before. That’s up from an average of $2.85 in 2007. The prices are causing people around the country to limit the amount of driving they do. Some companies are even going to a four-day workweek to help employees save money on their commute.
But why exactly, are gas prices so high right now? The answer is complicated. Supply and demand is an important factor. When there isn’t enough gasoline available for everyone who wants to buy it, the price rises. And with the economies of countries like China and India growing rapidly, the demand for oil and gasoline is growing as well.
Another factor that affects the price of gas is the Organization of Petroleum Exporting Countries, or OPEC. OPEC is a group of 13 countries that controls more than 40 percent of the world’s oil, and holds 65 percent of the world’s oil reserves. OPEC sets the price of oil by deciding how much of it they will produce. When they want the price of oil to rise, they simply produce less of it. Since they don’t have any major competition, they are free to set the price.
Other factors that affect the price of gas are high taxes, the expensive process of refining crude oil in gasoline, and unexpected events like natural disasters. Hurricane Katrina made it difficult to deliver oil and caused prices to jump in September of 2005.
Many Americans feel that it is necessary for the United States to become less dependent on oil imported from other countries. Some believe we should drill for oil off the coastlines of some states and in the Arctic National Wildlife Refuge in Alaska. Many experts believe, however, that such drilling would have little or no effect on the price of gasoline, and would be bad for the environment.
Related Links
- How Gas Prices Work
Thorough, well-documented article on the factors that affect the price of gasoline.
(Source: HowStuffWorks.com, May, 2008) - Arctic’s Oil Could Meet World Demand for Three Years
The U.S. Geological Survey has predicted that the Arctic Circle contains about 90 billion barrels of oil. The area is growing more accessible as global warming melts the ice in the Arctic.
(Source: Reuters, July 24, 2008) - Exploring Realities of Offshore Oil Drilling
Story explores the environmental effects of offshore oil drilling, as well as how much oil we can expect to find.
(Source: NPR, July 18, 2008) - For Commuters, Economic Woes Pile Up
Article covers how the high gas prices and other economic problems are affecting the American worker.
(Source: MSNBC, July 23, 2008)
Critical Thinking Questions
- Causes and Effects
What led to the record gasoline prices that we are currently experiencing? - Summarize
In your own words, explain how OPEC is able to control the price of oil around the world. - Form and Support Opinions
Do you think that the U.S. should drill for oil offshore and in the Arctic National Wildlife Refuge? Why or why not?
stupid 13 other countries!><
intresting that americas gas prices are very high!
wow thats alot of money for gas but i guess ifthats what helps usget to places we need to get were gonna have to live with gas being so high
If the financial rewrad for a given company is quite high then there must be more than 1.5 years worth of oil there.And if the companies had any sense, they know that they’ll be watched like hawks, so they’ll be on their best behavior.