Download to read offline
Rising Gas Prices 2012
- 1. Rising Gas Prices 2012 WillGas Prices be a factor in hampering our recovery? By Richard Ngo Can there be $5 a gallon on this gasoline sign? ___________________________________ May 2012- Michael Caruso, a florist from Washington DC, says that he pays 25% more to fuel his trucks to deliver flowers to his customers. “Freight costs have really gone up and they are affecting us that way”, he says. Meanwhile, motorists like Jorge Granados find it very difficult to keep up with the price of driving. “This is the first time I’ve paid $75 for a tank of gas”, he says. For producers, they need a vehicle and a road to deliver products and services. The people depend on them to receive these goods. However, the price of gas goes up, and the producer spends more money for gas. There’s less money available for other inventory. The producer now needs the consumer to spend more money in order to keep the products coming. Therefore, their individual budgets will be severely cut or modified. So, what is causing gas prices to go up lately? ___________________________ ''Freight costs have really gone up and they are affecting us that way.'' - Michael Caruso ___________________________ Background In America, Gas and other types of fuel are primarily used for transportation needs. Businesses use fuel for their trucks to deliver products to people. That is why businesses depend on more production of gas and oil within the country to meet their demands. However, prices go up because the demand is still there, but oil and gas are not being produced enough. If this continues, they affect the ticket fares on trains and buses because operators rely on fuel to operate these machines with power. Without it, fares go up so that money can be used by the transportation agency to get more fuel. So, what problems are causing higher demand and less production? Causes/Tensions One cause is the oil industry continuing to desire for more profit from producing other types of oil rather than gasoline. The price of petroleum went up continuously. There were tensions and unrest in Libya and Syria. Yemen had unrest in the Arab Spring. Finally, there were tensions in Iran over its nuclear weapons program and its threat to close the Strait of Hormuz, which produces 20% of the world's oil. These tensions have led to no production of oil or
- 2. gas for along period of time. So, what's the latest? The Latest on the Situation(2012) As of May 2012, Gas prices have continued to decline. This is due to more oil and gas production in America, and this leads to less demand from developing countries. Also, the Middle East has now begun to ease its tensions. On 5/3/12, Gas is only at $3.80/gal., according to AAA. This is good news only for now. However, is there a solution for the long- term? Gas prices have been on a never ending roller-coaster. '' This is the first time I've paid $75 for a tank of gas.'' - Jorge Granados Possible Solutions According to the National Wildlife Federation, one solution is to increase fuel economy. New fuel economy standards set by the U.S. government will bring a car or a truck have a fuel efficient avg. of 54.5 mpg by 2025. Fuel expenses will be saved by 40% in 2030. Also, more innovation needs to be included in vehicles. Cars should have electricity instead of gas. That way, when the price of gas goes up, people won't have an economic burden, and still save more. Modern infrastructure should be built. Finally, we should stop oil drilling, tap dirty fuels, and end oil subsidies for the most profitable companies in the industry today. Conclusion As we continue to analyze the crucial relationship between producers and customers/consumers, it's important to keep the economy going and to save money. If developing countries continue to produce more oil in the long term, then demand will be met. This will drop Gas prices significantly. This is a needed and lasting effect for drivers today. For Additional Information National Wildlife Federation. ‘’Taking Control- Real Solutions To Rising Gas Prices’’. www.nwf.org , March 2012. Nerurkar, Neelesh and Pirog, Robert. ‘’Rising Gasoline Prices 2012’’www.fas,org , March 1, 2012. Reeves, Benjamin. ‘’ Gas Prices Rising 2012: Diesel Exports May Drive Them Higher’’. www.ibtimes.com , March 29, 2012. White, Ronald D. ‘’Analysts: Brace For Record Gas Prices in 2012’’.www.latimes.com, November 8, 2011.