Why Are Gas Prices So High?

Remember the internet bubble boom and bust? Or is your head still reeling from the housing bubble burst? With oil prices doubling in only a year, you might be asking "bubble bubble, or is oil in trouble?"

Retail gas prices surged to almost $4 a gallon, and in some parts of the country, they are surging close to $5. Gas prices keep setting new records every day.


The real question is, why are gas prices so high? There are many factors to calculate when determining how much higher gas prices will go. We must consider supply, demand, the strength of the dollar, politics and of course speculation.

Still, while looking at the gas pricing formula, things don't seem to add up. For example, it was only a few months ago when we were trading oil for only $86 a barrel. The supply really hasn't changed that much since then. There is no oil shortage. In fact, inventories actually rose a bit. As for demand, we see that our sluggish economy has managed to put a dent in demand. Our weak dollar which has been slipping into a deep coma, is now starting to show signs of life, and that typically dictates lower prices for gas. These conditions alone might suggest that we're in an oil bubble which is about to burst.

However, the situation of why are gas prices so high is much more complicated than that, and the really bad news is, things will only get much worse.

Right now, the out of control oil prices are hitting many parts of our economy harder than others, and it is especially hurting those companies who use a lot of oil.

Airlines are going bankrupt. And the ones who are struggling to survive are tightening their seatbelts for a very long and bumpy ride ahead. Just this month they announced that they are cutting jobs and chagrining new fees for baggage.

Carmakers are also cutting back, reducing vehicle production and laying off workers. If gas prices go much higher, the damage to the United States economy will be much more serious than a mild recession.

Consumers are now driving less, which has sent oil investors in a panic about falling demand, which has helped to send oil prices sharply lower. Normally a drop means lower prices at the pump. But in this case, the drop looks like the perfect buying opportunity to some investors in the oil speculation arena, which pushes gas prices even higher.

But will the price of gas go down? It's hard to say. We do know that as prices continue to go up and up, consumers will use less and less. That will devastate our economy because the price of food and other necessities will be driven up. The trucking industry will slowly diminish. Jobs will be lost and wages will be flat. It will become a death spiral which will be hard to escape, unless the price of gas does drop sharply and remain manageable.

Obviously that means consumers have tremendous power in this equation. And a simple solution within their grasp is simply to change from using gasoline in their cars to burning water. Thousands of people have made the switch, with many more on course to do so.

Discover how you be join the thousands of other people who are doing something amazing about gas prices, and see how easily you can cut your your fuel cost to $0 this week while driving your car. Find out how you can run your car on water and save thousands of dollars too! 
 

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