Why the Price of Gas is Rising
On Facebook, Laura asked, “what is causing the rise in fuel prices in the USA and who benefits from this increase?”
Fuel prices in the United States are rising because of the increasing cost of crude oil. Crude oil is the natural form of oil as it is found in the ground, before it has been refined into gasoline. As of January 2012, the price of crude oil made up 76% of the cost of regular gasoline. In January, the national average retail price of gas was $3.38 per gallon. This means $2.57 per gallon paid for crude oil. Find out what makes up the rest of the price.
There are a few reasons why the price of crude oil is rising. There’s more demand from countries that haven’t used very much oil in the past, such as China. Also, instability in the Middle East means recent output from countries like Libya and Iran has been unpredictable or low. The Middle East produces a lot of the world’s oil and less oil means higher prices.
Currently, the United States’ demand for oil is down and production of oil is up. These factors would normally make prices go down. However, demand for oil in emerging markets like China is so high that it overcomes these market forces.
The countries and corporations that sell crude oil benefit when the price is high. In 2010, about 49% of the oil used by the U.S. was imported from foreign countries. Learn more about dependence on foreign oil.