Observing the price of gas over the last couple of years, many Americans are now crying for help from the federal government. It is expected that by summer gas will be around $4 a gallon. Currently in the city of Columbus, the average cost of gallon of gas is approximately $3.45 while a barrel of oil is over $100 a barrel. That is only a $.55 difference as estimated by summer of 2011. One may ask what steps could be taken by Congress, Senate, or the President to reduce the inflammation in gas prices.
With gas prices at an all-time high and steadily rising, many Americans are being forced to sell, trade, or buy a smaller vehicle. Many individuals will need to sell their current vehicle just to be able to afford gas for it. With gas currently at $3.45 a gallon, it’s no wonder many people are using public transportation, car-pooling to jobs, and riding bicycles to work. A person who has a family to support, making fairly decent money, and owns a truck or a vehicle with a large tank will soon have to make changes as to their way of commuting daily. Everyone is being affected by the rising cost of gas.
Many suggestions have been brought to the Congress, Senate, and President for help. Although many people are crying out for help, the actions from the federal government have been limited or unseen.
Many suggestions have been offered to the President in regards of what he can do to reduce the price of gas. A research by Mark Clayton reveals that the President proposed to cut back or stop the spending of oil. It was also proposed to the government to end the Big Oil’s tax break. A tax break may not necessary be the answer to lowering the gas price, altogether if a tax break is implemented; at some point the American people will have to deal with an increases in their taxes.
Inflation has been on the rise with some commodities increasing their prices by over fifty percent. Economists have argued that the energy policies in place have resulted in the high prices in gasoline. They have also described the need for the US to put more effort in offshore drilling of oil, instead of fighting to control the oil in the Middle East. In addition to the disorder in the Middle East and increased demand for oil, the switch to EPA summer blends in May will lead to further rise in crude prices. One of the suggestions is that the federal gasoline tax be suspended until the prices drop. The local tax should also be suspended, since these taxes collectively amount to about 50 cents, at the pump.
The number of Americans who still think that the economy conditions in the United States are good has dropped from 25% to 15%, in the last two years. The high gas prices are a result of the supply and demand chain, and have little to do with corporate greed or poor planning. As such, the government should not intervene, and the market should solve the issues by itself. There has been increased demand for oil in china and India, which has been observed to be one of the reasons for the high gas prices. The high cost of gas has also been attributed to high gas taxes, war in the Middle East and lack of adequate refineries in the US.
The high demand for oil is partly due to vehicles with low fuel economy. Most of these vehicles are more comfortable and safer, and anyone who can afford to maintain them does not mind the fuel economy of the car. The shortage in supply can be attributed to the environmental regulations that are opposed to new refineries as well as the political influence that is against the exploration of oil in Alaska and other parts.
The high cost of gas in the cities has been attributed to the variety of gas blends, and the specific requirements for various parts of the country. High prices have also resulted from the increased number of people driving to their holiday destinations in order to avoid the airport hustle.
A decrease in the demand for gas should cause a significant decrease in its price. One way to accomplish this is by using technological advancements to increase fuel economy of the average cars. If the fuel economy of vehicles can be improved from 24mg to 40 mpg, then the consumers can save up to $40 billion, within a span of ten years, of its implementation. When all the trucks and vehicles have been replaced, consumers can save over $65 billion in fuel consumption. If policy makers can implement the strategy that requires all vehicles to increase fuel economy to 40mpg, then the consumers can be protected from gas price spikes in the future.
Economic analysts have estimated that the economic growth of the united states would reduce by approximately 25% if the price of oil got to $100 a barrel. This would lead to increased cases of unemployment. The difference between the current gas spike and the gas spike in 2008 is that there are fewer jobs now, and the values for real estate are lower. In a span of three months since the rise in gasoline, drivers have spent over $13 billion. The tax cut resulted in increased incomes, though it did not lead to increased consumption, as was expected with the improvement of the economy. With the increased energy prices and food prices, people have responded by spending less on entertainment and travelling. This was observed in about 70% of the population.