Gas Fiscal Policy

Just because the government say it's in the interest of the people doesn't mean they really are. Most people think that if the government mandates gasoline then the price of gas must decrease; that's not always the case. In fact there are chances where the price of gas can increase. There are many debates arguing about how much power the government has over us. Giving them the opportunity to mandate gasoline is giving them even more power. If the government see that they are losing fuel, then they may increase the price above the equilibrium to save fuel.

The consumption of the oil cause changes in the supply and demand. The United States produces 11 million barrels of oil every day. We are one of the biggest countries to have a big influence on the production and prices of the oil. The basic supply and demand theory explains that the if a product is produced more, the cheaper it should sell. If a country were to double the output of oil day, prices would fall and the Production is high, but the distribution of oil isn’t keeping up with the market. The United States builds an average of one oil refinery per 10 years. This is a net loss due to the fact construction has slowed down since 1970s. Since 1970s, the United States has 8 less oil refineries today. The reason why we are not oversupplied with cheap oil is because of the other countries’ higher net margin and the only operate at 62% of their capacity. Excess capacity is only there to meet future demand. With demand moving accordingly, oil prices will continue to be set mostly by the market — despite external players’ best efforts. (McFarlane)

Crude oil is a major source of energy for the world. Everyday the United States consumes more crude oil than it produces. The growing number of barrels of oil imported into the Unites States and rising gas prices are major concerns. Even though increasing the United States crude oil production may not lower gas prices immediately, it will eventually allow the United States to be energy independent.

People endlessly discuss the cost of gas. Whether gas costs are rising or falling, car owners and financial specialists alike will point out gas costs as an indicator of the shifting condition of the economy. Market analysts would surmise that a surge in fuel costs would prompt more carpooling and less driving altogether. However, generally, fuel consumption has had a moderately stable demand with shifting costs. This is what influences the demand for fuel. No matter the cost if you have a car and you want to use it, you have to fuel it. People must go about their lives to complete their everyday tasks, and therefore pay little mind to the cost of fuel. Subsequently, cost has little effect on demand.

A recent price shift that all American drivers have experienced is the constant fluctuations of gas prices. As I turned 16 in 2013 gas prices were on the rise ranging from $3-$4 across the nation. For many Americans it caused them to make economical decisions on what vehicle to buy taking on extra jobs to pay for gas, cutting out vacations because of the high gas expense. During 2013 I would even struggle filling up my dodge pickup every week and realizing how much money I was spending just on gas. However, in 2016 prices have decreased to $1-$2 dollars. If we look back on the history of gas prices we can analyze that reason gas prices change so often is based on the amount of crude oil. Since oil is the main input for producing gasoline, so if there is a rise in oil price than gasoline price must rise as well. Many factors go into affecting gas prices, but one example in particular is the detriment of

markets since December of 2000, when the Commodities Futures Modernization Act removed it from the items regulated by the Chicago Mercantile Exchange and C.F.T.C. Without control, the price swings in step with the actions of speculators that do not take delivery of the commodity, but wager on the price of future delivery and then sell the contracts if the markup is positive for them. With so many players in the futures markets, the actual users of the commodity are forced to buy the oil on long-term contracts that allow them to benefit from economies of scale, by the size of the purchase, and they get a hedge against inflation by purchasing well in advance of their actual need. Industrial users of oil and its derivatives make contract purchases to lock in a level of supply for their needs, but whenever there is a spike in the price of oil, the industrial users will claim that the spike forced them to raise their prices. We gullibly believe it and some of us pay more and some of us stop buying. The present group is small, and nonexistent when it comes to gasoline purchases. We are addicted to our cars and driving, thus we know the link between oil and gasoline, and we are quick to accept that OPEC raised the gas price theory on the evening news. This long narrative is to tell you that as you look for the shift in the equilibrium point of price to demand, understand that the movement is human nature and not actual market forces. Honest price changes convey information about the product or its manufacture, or its shipping cost, or if a tariff has been imposed. In every case, the data is an honest statement of the burden of material or labor or transport or taxes that has been revealed. With oil, there are too many liars inputting data into the price system for their own benefit. The worst feature of oil is that it is priced by cartels and by speculators and that only by hedging our purchases can we stop the

At this point, the nation should be able to produce enough oil for its citizens. Dropping the price right away would only repeat the same situation: a high demand with no actual profits for the oil companies. The government should instill a price floor of oil to keep the demand of the oil low and to control black market on oil. The price floor would bring up the price of oil up by a certain degree, and, according to the figure 1-2, decrease the demand. Maintaining a price floor can be a costly operation for the government, and one way to draw a fund for maintaining such policy is to mandate a tax, even a small amount, on other products such as corn

Many people think that it is corporate greed and that putting a cap on gas prices would solve the problem. Remember the 1970s, when people had to wait in long lines for gas? The reason for that was because many places didn 't have any gas to sell. Gas companies stopped selling gas to them because the gas companies couldn 't make a profit. They couldn 't make a profit because there was a cap on gas prices. Learn from

To answer the question of whether oil companies make unwarranted profits off the inflated sales of gasoline, we first need to have some understanding of how the oil market works. This is to try get to the bottom of what really makes oil prices fluctuate with such a high frequency, which results in worldwide ramifications. The most basic or raw material for the oil market is crude oil, also known as petroleum, which other oil products are extracted from. This happens to be the world’s most traded product.

Anybody from Texas who drives a truck has felt glad about paying less money in regards to purchasing gasoline at a gas station. The truth is that the price of gasoline has been dramatically affected by the recent plunge in oil prices. There are different theories that explain the reason of this phenomenon. This paper will analyze the current oil market, as well as the key players who are winning the “war” of the oil prices.

The American people are so dependent on oil that the supply and demand increases the cost every time at the pump. If people are willing to pay the four dollars a gallon, then the stores will charge it. The less fuel efficient your car is, the more you are going to the pump. The Hummer H2 for example, gets 12.3 miles per gallon. There

Consumer demand for gasoline is an incredibly strong market force, strong enough that many consumers continue to buy the fuel regardless of market price. As of May 10, 2004, average gasoline prices are at an all-time high of $1.941 per gallon across the nation, and up to $2.21 in California 7. Yet

Additional contributors to the price increase are high demand for gasoline coupled with skyrocketing crude oil prices (US EIA 1). The high demand for gasoline is attributed to the high number of drivers on the road during the summer and other energy intensive activities. The EIA report indicates that crude oil prices

There might be many possible solutions in fixing the problem of rising in the gas prices. If we look at the governments, they should have a very big responsibility on their shoulders. Provision of a strong public policy particularly regarding the gasoline management, with a strong and capable leadership which is capable enough to enforce implementation of these policy rules is the major responsibility of the governments to control any sort of price hikes in gasoline. Corporations are also very much responsible in whole the scenario. They

Gasoline prices can be directly related to oil. In 2014, “a barrel of Brent crude cost $110,” but in 2015 it cost only “$60” (“The high cost of falling prices; Deflation.” Economist. 21 Feb. 2015: 69. eLibrary. Web. 22 Mar. 2016.). The barrel of crude oil was hence cut by “45%” and “in America the price of gasoline has fallen by 35%” (“The high cost of falling prices; Deflation.” Economist. 21 Feb. 2015: 69. eLibrary. Web. 22 Mar. 2016.). As you can see here because crude oil is a main component of gasoline, their prices correlate - meaning that when one price shifts downward the other will follow. Crude oil and gasoline are not the only products that have seen a decrease in value in the past few years. All around the United States and in many other areas of the world, the value of products are being slashed.