Gas and Oil Inflation and What Government Can Do

Gas and oil are now starting to affect us in all aspects of life. This is happening since the prices of both are significantly increasing and going out of control. Gas or gasoline is a non-renewable fuel made from petroleum. Petroleum is a mixture of liquid, gaseous, and solid hydrocarbon compounds found naturally underground. Refineries in the U.S. can produce about 20 gallons of gasoline from every 42-gallon barrel of crude oil that is refined. Gasoline is most used in the U.S. passenger vehicles with internal combustion engines. Americans use about 385 million gallons of gasoline every day. With about 299 million people in the U.S., that equals more than a gallon of gasoline every day for each man, woman, and child. Since the U.S. doesn’t produce enough crude oil to make all of the gasoline used by American motorists, we have to import it from other countries in order to supply the demand (Gasoline: A Petroleum Product). Some gas companies that are directly connected to supply the gas to the world (including the U.S.) are BP Lubricants, Chevron Corporation, Exxon/Mobile Corporation, Valvoline Company, and notable others. Then some oil companies that work with gas companies to produce the products globally (including the U.S.) are Gulf Oil Limited, U.S. Oil Company, Incorporated, Taylor Oil Company Incorporated, and notable others. Now, all of these companies that produce gas and oil, are now putting up their prices since we can’t supply the demand here, and that the war in Iraq is putting up prices on crude oil production (Industry Center). The result of so much people using their cars to get from place to place has brought the world’s gas prices and oil prices to an all-time high. People are then affected in all aspects of life by them paying a great amount of money for what they buy. Since the government has so much power over what we do in all countries in the world, they should do something for us. They should somehow find a way regulate or fix the gas and oil prices, or possibly make a set plan with gas and oil companies. So if we can’t find a solution soon or in the next couple of years, a monstrous problem may be lurking in our future.

Gas and oil prices have changed dramatically in the last ten years going from almost 80 cents to about $4.25 in the U.S. Precisely 10 years ago (April 29, 1996) as gas prices reached a shocking $1.27 a gallon, President Bill Clinton ordered his Energy and Justice Departments to launch investigations to find out why. A somewhat decent reason would be "supply is down and demand is up." American demand is up because we've lived in a fool's paradise since the mid-1980s. Until then, beginning with the oil shocks in 1973, Americans had changed appliances, cars, and habits achieved astonishing energy conservation. Energy use per dollar of gross product was cut by 30 percent in little over a decade. Oil prices collapsed to about $10 a barrel. In March 2000, the price of gas hit $1.80 per gallon. Scandalized congressional Republicans shamelessly pushed for repeal of Clinton's whopping 4.3-cent gas tax increase. Then as we went to war in Iraq, in the early parts of this decade, our prices have started to soar higher, since we are having problems with buying gas. Then as we look at the prices today, they are climbing as we speak, to more than $4.25 a gallon at the pump. Also since our country uses more than it makes in gas, we might run into trouble, because we can’t supply the demand (Krauthhammer). Next since there is such a global instability, there are supply shocks in the oil markets all around the world (including the U.S.). Like in the 1970’s, there were problems, but now seems like it’s happening once again. Crude oil hit an all-time high of $50 a barrel last week (10/3/04) and many expect crude, heating oil, gasoline and natural gas to go higher before they go significantly lower. Then since our economy is becoming larger and the only way to move supplies/food is to use gas/oil, the oil prices are going to increase. As we look to the prices now, they’re more than $120 a barrel (Insama). But if we look in the future of using these products (Gas/Oil), we might run out of them and we will have to find a different way to use transportation for the world, as a whole.

Other than the prices of just gas and oil, there are other things that are affected. Such things are food, which our survival depends on, and having heating or air conditioning in our homes. From 1987 to 2007, food prices increased an average of 2.7% per year, excluding the drought years of 1989 and 1990. During 2005 and 2006, food prices rose 2.4%. Globally stock of corn, wheat, and soybeans are at historically low levels. Drought in Australia and Eastern Europe,