Perhaps one of the most frustrating issues is the raising of gas prices. It is oppressive to people who work low paying jobs. It takes money out of the pockets of people who may use that money to buy other items. On top of it all it adds to the prices of goods like bread, milk, and other groceries. If you live in the Midwest or an area without public transportation you are in fact stuck. Besides carpooling, options are limited and everyone feels the pinch. Barack Obama recently came out against the big oil companies demanding that other countries increase their supplies now that the Middle East is in crisis. Even John Boehner was on ABC Nightly News discussing his dissention with gas companies and prices. The question remains, why are gas prices so high, and what in the world can we do about them?
Why so High?
Pretty much everyone knows that once the conflict in Libya and Egypt started gas prices began to rise more rapidly. Additionally, the summer travel season is approaching which also signals an increase in gas prices. Still, how do these events contribute to the rise in gas prices? It all has to do with speculation. See, when conflict arose in the Middle East that made investors get a little scared. They were afraid that demand would outweigh supply causing a situation where traders buy future contracts which are agreements to sell oil on a future date at a specific price. This in part was done due to the declining US dollar. Basically the traders can bid up the price of oil and create a situation where even though the demand is not outweighing the supply they make it so the prices go up and blame it on events such as Libya and Egypt.
Drill Baby Drill
As hopeless as the gas crisis may seem solutions are thrown out now and again that provide food for thought if nothing else. “Drill baby drill” is the battle cry of many members of the GOP. It does seem like a logical idea. If we open drilling in areas of the US then we will increase the amount of supply, thus lowering the demand, and in turn lowering prices. What is really overlooked in this scenario is the fact that the oil drilled in the US would enter the global oil market, not just the US market. Since we would produce relatively small amounts of oil in comparison to the rest of the world it probably wouldn’t make much of a difference in the end. In short it would be like throwing a pebble into the ocean. Alternative fuels seem to be discussed frequently, but diesel is even more expensive than gasoline currently. Biodiesel seems like a genius idea, but I’m not sure how that fuel would work with cars that only take gas. Who wants to make the investment to make it so their car can take alternative fuels and is that even possible?
What do you do?
During the gas crises most of us see our hard earned dollars go into our gas tank, grateful for the ability to drive to our job, get a paycheck and put another big chunk into our gas tanks. Undoubtedly this is frustrating, but ingenuity is the child of necessity so my question is what do you do when the gas prices are high? What changes do you make? Comment here or go to http://thevotereffect.com. Learn what other people are doing during this tight money crunch. Also comment on the issue: Is Barack Obama doing enough to lower gas prices? Does he need to be doing more?
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Yes, there IS something we all can do about Obama's fuel price fiasco. It starts with putting the blame exactly where it belongs, on Obama and his administration, and keeping it there.
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Drill, baby, drill is a good idea. Because the demand for oil is so inelastic, any increase in the supply, and the refinement, of domestic oil would lower the price of fuel significantly.