Chicago city is the biggest city in Illinois state in terms of size and population. Since last year the city has been experiencing the problem of mounting gas prices that have affected the inhabitants.
The unleaded gasoline average prices seem to have a trend of rising since last year compared to other cities in the USA. The increasing rate of the oil prices is rising at a higher rate where the price per gallon is currently above $4 while in other cities the price is below these prices.
The main origin of this problem is the OPEC’s frequent increase of the oil prices and reducing the amount of oil drilled creating a worldwide shortage of gasoline due to their imposed quotas.
More so, the price of crude oil and the refining costs are on the increase hence affecting the price of gasoline. Consequently, the federal and state gasoline taxes have been on the rise thereby increasing the price of oil.
The major effects include the rising standard of living as the manufacturing companies have passed the high cost of production to the consumers caused by high fuel prices because the high prices tend to diminish their profits; hence food commodities have become expensive.
As Bruce Bullock says “The consumer doesn’t have much choice in the short term, Right now, you might not see that impact because they don’t have a lot of choices.”
In addition, many people have opted to use other means of transport with the number rising by 10% such as the metro trains that have become cheaper compared to road transport.
For instance, Dr. Michaela Winchatz, Assistant Professor, DePaul, Communication commented “I used to be able to fill my tank at around $25 — now it’s costing me $40. So, for a trip to Illinois, it’s going on $25-30 extra each time……. Now, the train is definitely cheaper.”
Many people have complained of the high gasoline prices with many changing their summer plans but others stick to their prices especially the high paid class.
Sam Angarone, Senior, Commerce argues that “I would relate gasoline as an ‘inelastic’ demand… I do not plan on changing any plans based on gas prices; in fact, I and some friends are going on a 3-week long camping trip this summer, driving to national parks through Canada and the Rocky Mountains in the US.”
The trend of the rising unleaded gasoline average prices in Chicago compared to the whole of the united prices is shown below:
Time period Chicago USA
Today 4.183 3.897
Yesterday 4.181 3.885
One Week Ago 4.074 3.788
One Month Ago 3.787 3.560
One Year Ago 3.678 3.230
The trend of unleaded gasoline has been on the increase in Chicago at a higher than the average rise in prices in the USA. This is supported by Communication Professor, Dr. Bruce Evensen who says:
“But it’s hard to see my fill-up crash through the $40 barrier and reach for even loftier heights. So I stop pumping before I get there, and my fill-ups are the same price as they’ve long been, about $35 or $37 a fill-up. The only problem is I’m not filling up.”
There are various elements that affect the price of the gasoline in Chicago as represented in percentages below: the price of the crude oil constitutes 45% of the gasoline price, the federal and state taxes related to gas contributes around 25% of the price while the refining, distribution and the marketing costs constitute approximately 22% and 10% respectively.
According to Jonathan Perman, executive director of the Evanston Chamber of Commerce; the rise in gasoline prices has been due to the OPEC imposition of the crude oil production quotas that have to demand exceeding supply worldwide.
In addition, He believes that the cut in sales tax and the subsidizing of the gasoline cost to save the manufacturers and consumers has very little effect as the problem is international hence local solutions will not be effective.
References
John V. Mitchell. A New Era for Oil Prices, London: Associate Fellow Chatham House, 2006.
Heinberg, R. The Party’s Over: Oil, War, and the Fate of Industrial Societies, London: New Society Publishers, 2003.
Chicago gas prices. 2008. Web.