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Iraq was supposed to begin exporting on Memorial Day, but due to erratic
behavior, talks have been put on the back burner. Since there are so many
factors involved, even if Iraq exports a tremendous amount of oil, consumers
will probably not know the difference. Other factors, other than the demand and
price of crude oil in the world effect prices. Several interruptions in The
United States production of oil has staggered the countries production. The
United States is the only major oil-producing country where oil producing
grounds are owned by the land owner and not property of the government. This
makes for inefficient drilling since one party is not completely responsible for
gathering all the oil.
Average production per well is only 15 barrels per day,
far less than any other oil producing countries. Alaska has the best oil
producing land, but due to the land and harsh climate, it makes it hard to
gather. It is also very expensive to develop methods of transportation which
slows gathering of the oil. Several refineries—on the West Coast, in the East
and on the Gulf Coast – have experienced operational difficulties which affected
product supplies in the marketplace. (4) It is rumored that their are supply
tanks buried somewhere near the Gulf of Mexico that could support the country
for 66 days if anything were to happen. The United States and other countries
have been looking into alternative forms of energy in order to lower their
dependency towards foreign oil. Money is being spent into researching solar,
hydro, nuclear, and alternate forms of energy. Government regulations also
create changes in gas prices. California has recently gone threw price increases
at the pumps due to new legislation. The state is heavily overpopulated and has
the worst smog of all the states.
California gas stations are changing to a
cleaner gas that will cause less air pollution, but will be more expensive. The
increase is approximately 10-12 cents. That is the price Californians are going
to have to pay for cleaner air. Another government regulation is aimed towards
the refiners of the oil. The government is putting pressure to change from their
winter grades which are oxygenated, to summer grades that have lower
evaporability, helping the environment. These costs to switch fuel show up at
the pumps, the public has to pay for governmental research and environmental
precautions. The United States doesn’t have it as bad as some other countries.
The U.S. pays an average of $1.21 per gallon of gasoline. Japan pays
$5.35/gallon, Germany pays $4.04/gallon, The United Kingdom pays $3.38/gallon
and Mexico pays $1.55/gallon.
All four are significantly more than the United
States pays. Taxes are the largest component of the prices we pay at the pumps.
Taxes were the single largest component cost of gasoline, amounting to 42.4
cents per gallon, including 18.4 cents per gallon in federal taxes, 22 cents per
gallon in weighted average state taxes and an estimated 2 cents per gallon in
local taxes. (5) The President of The United States of America, Bill Clinton,
has on several occasions proposed to increase the taxes put on gas. In 1993
Clinton proposed a gas tax that raised the prices at the pumps by 7.5 cents per
gallon, a 6% increase of the price. Then in 1996, Bill Clinton made a proposal
to raise gas taxes by an additional 2.5%. Clinton wanted to raise prices 10
cents per gallon overall in his four years in office, all part of his deficit
reduction plan. (6) Clinton’s entire campaign was based around not hurting the
American people with taxes, but once in the white house, has made the record
books with the highest amount of gasoline taxes ever.
Taxes are so much a part
of the prices we pay that …in 1981 when pump prices where at an all time high of
$2.27 per gallon, the taxes were just 27.7 cents per gallon. The real cost of
motor gasoline to consumers fell by about a dollar per gallon between 1981 and
1995, but over the same period federal, state and local motor gasoline taxes
increased by nearly 15 cents per gallon. (7) Taxes in the United states have
increased an average of 15.6% in the last three years. mThis chart shows some
United States cities and the price increases.
Many factors influence the prices
of gasoline. Gasoline prices are affected by the price of crude oil in the world
market, supply and demand for gasoline, local market competition, temporary
supply interruptions, government regulations, or taxes. Everyday new things can
happen to change the prices that American consumers pay at the pumps. The United
States is dependent on foreign oil and must continue to ensure stability in the
Middle East, or until we have found alternate sources of energy. Taxes will
continue to climb due to the rise of government control. Regulations will
continue to become stricter until gasoline usage is more environmentally
friendly. It looks as if gas prices will continue to fluctuate, but over time
will tend to rise.
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