# Why are gas prices so high? **URL:** \ **Category:** Factual Questions\ **Created:** [March 8, 2003, 6:25pm UTC](https://boards.straightdope.com/t/why-are-gas-prices-so-high/159941 "2003-03-08T18:25:11Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![handy](https://avatars.discourse-cdn.com/v4/letter/h/b5a626/32.png) [@handy](https://boards.straightdope.com/u/handy)\ **Post date:** [March 9, 2003, 3:58pm UTC](https://boards.straightdope.com/t/why-are-gas-prices-so-high/159941/21 "2003-03-09T15:58:59Z")
“even though 13% of our imported oil comes from Venezuela?” Some oil guy on tv said that we don’t buy oil from a country, but we buy from a pool. All the nations with oil put it into a pool & that’s where it’s bought. ---
**Author:** ![TBone2](https://avatars.discourse-cdn.com/v4/letter/t/6a8cbe/32.png) [@TBone2](https://boards.straightdope.com/u/TBone2)\ **Post date:** [March 9, 2003, 4:03pm UTC](https://boards.straightdope.com/t/why-are-gas-prices-so-high/159941/22 "2003-03-09T16:03:02Z")
> [@](#): > > \*Originally posted by Crafter\_Man \* > \*\*The price of gasoline is determined by supply and demand. \*\* A bit too simplistic, I fear. In most nations, including the US, the price of gas at the pump is the product of a number of factors, some of which – taxes in particular – have little to do with supply/demand. When I first started driving (1971), I bought premium (ethyl leaded) gas for just over 30 cents a gallon. Today, I pay more than twice that amount on every gallon in taxes alone. Also, it’s fair to note that the ideal supply/demand relationship is often artificially manipulated by OPEC. ---
**Author:** ![mangeorge](https://avatars.discourse-cdn.com/v4/letter/m/d78d45/32.png) [@mangeorge](https://boards.straightdope.com/u/mangeorge)\ **Post date:** [March 9, 2003, 5:10pm UTC](https://boards.straightdope.com/t/why-are-gas-prices-so-high/159941/23 "2003-03-09T17:10:08Z")
True enough, **TBone2** , the price of crude is artificially manipulated, but the price of gasoline at the pump is very much determined by supply and demand. Or “market factors” I think it is the oil companies call it. If asked why their prices are so high, an oil company will say that their prices are “competetive” for the market area. ---
**Author:** ![manhattan](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/manhattan/32/7_2.png) [@manhattan](https://boards.straightdope.com/u/manhattan)\ **Post date:** [March 9, 2003, 5:48pm UTC](https://boards.straightdope.com/t/why-are-gas-prices-so-high/159941/24 "2003-03-09T17:48:21Z")
> [@](#): > > \*Originally posted by Flying\_Monk \* > \*\*“A general strike in Venezuela” > > Yeah, right…\*\* Right. > [@](#): > > **our oil consumption is increasing at an exponential rate,** U.S. oil consumption has been growing at less than GDP for several years now – more like at population growth. > [@](#): > > \*\* and oil deposit discoveries are shriveling. \*\* Well, maybe. Certainly we’ve found and exploited most of the large deposits on land in the continental U.S. However, there are some large probably fields in Alaska which have yet to be proved or exploited, Canadian oil sands become profitably at around the current crude price, there are probable additional finds in Canada and deep-water Gulf of Mexico drilling so far has been very promising at prices as low as $20-25/bbl. > [@](#): > > \*\*Not to mention the steadily advancing effects on the environment, which will only increase gas prices in the form of taxes. \*\* Without addressing whether the environmental effects of petroleum are as bad as advertised (a GD topic, after all), most gas taxes don’t go to environmental remediation but rather to improving and building the very roads on which the gasoline is consumed. Another factor keeping crude (and thus gasoline) prices high right now is a very weird market breakdown. Because so many producers feel that the current high prices are artificial because of geopolitical factors (Iraq and Venezuela), they’re investing less than would be normal at this price point. Normally, when crude gets up around $30/bbl, you expect small producers to begin recompletion projects on “used up” fields, to employ secondary and tertiary drilling methods (water and gas insertion ), test-drilling in places with incomplete 3-D seismic, etc. Not nearly as much of that is happening this time, which in turn keeps the prices high. ---
**Author:** ![manhattan](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/manhattan/32/7_2.png) [@manhattan](https://boards.straightdope.com/u/manhattan)\ **Post date:** [March 9, 2003, 6:04pm UTC](https://boards.straightdope.com/t/why-are-gas-prices-so-high/159941/25 "2003-03-09T18:04:14Z")
> [@](#): > > \*Originally posted by TBone2 \* > \*\*In most nations, including the US, the price of gas at the pump is the product of a number of factors, some of which – taxes in particular – have little to do with supply/demand. When I first started driving (1971), I bought premium (ethyl leaded) gas for just over 30 cents a gallon. Today, I pay more than twice that amount on every gallon in taxes alone. \*\* Yes and no. Yes, taxes are an important non-market component of the cost of the low-cost producer, but at the pump consumers still make choices like not driving that marginal mile, purchasing a higher-economy car, etc. So supply/demand is still the most important factor. Also, remember that there’s been a lot of general inflation in the past 32 years. I’d be curious to know whether, in constant-dollar terms, gas taxes are higher, lower or about the same as they were in '71. I’d guess higher, but not as high as you’d think. As our British friends point out, U.S. gas taxes are pretty low by developed-country standards. > [@](#): > > \*\*Also, it’s fair to note that the ideal supply/demand relationship is often artificially manipulated by OPEC. \*\* True. However, OPEC is claming that, ex-Iraq and Venezuela, they’re running pretty close to full bore right now. Most analysts believe them. If so, the cartel’s ability to manipulate prices to their announced preferred price of $25-8/bbl is pretty much nil. ---
**Author:** ![Flying\_Monk](https://avatars.discourse-cdn.com/v4/letter/f/48db29/32.png) [@Flying\_Monk](https://boards.straightdope.com/u/Flying_Monk)\ **Post date:** [March 9, 2003, 8:41pm UTC](https://boards.straightdope.com/t/why-are-gas-prices-so-high/159941/26 "2003-03-09T20:41:38Z")
Galen had it right. What happened in Venezuela could in no way be called a “general strike”, although that’s what the media has been reporting. I didn’t want to turn this thread political, and that’s hard to do when you’re talking about oil. I also didn’t want to spend hours digging up cites when I’ve got more important things to do, but the info on oil consumption & production is available to anyone who wants to do the legwork. I stand by my statements; we’re using more & more oil every year, while discovery rates have been going down. Taxes are also very difficult to break down; we pay about 54% tax on fuel right now, though only about 38 cents per gallon is directly caused by federal & state taxes paid at the pump. Much of that is caused by environmental legislation, though again the exact amount is hard to nail down. Also, the environmental effects of using fossil fuels and their impacts on the economy almost certainly guarantees the environmental portion of the taxes will increase. Of course, if you’re reading info published by ExxonMobil, or “think-tanks” like the Heritage Foundation, you’re not likely to get accurate figures…but again, I’m not here to start a political discussion. Don’t listen to me, I’m just a nut… “Growth for the sake of growth is the ideology of a cancer cell.”- Ed Abbey ---
**Author:** ![I\_Brian](https://avatars.discourse-cdn.com/v4/letter/i/c89c15/32.png) [@I\_Brian](https://boards.straightdope.com/u/I_Brian)\ **Post date:** [March 9, 2003, 10:26pm UTC](https://boards.straightdope.com/t/why-are-gas-prices-so-high/159941/27 "2003-03-09T22:26:45Z")
Don’t worry about prices though - in a few days the US and UK invade Iraq, assuring themselves of control over the second largest oil fields in the world as under their control. Result: US consumers get lower prices. (Us Brits won’t, tho’.) Does that make you happier? ---
**Author:** ![handy](https://avatars.discourse-cdn.com/v4/letter/h/b5a626/32.png) [@handy](https://boards.straightdope.com/u/handy)\ **Post date:** [March 9, 2003, 11:41pm UTC](https://boards.straightdope.com/t/why-are-gas-prices-so-high/159941/28 "2003-03-09T23:41:27Z")
“Result: US consumers get lower prices.” If we win & if we don’t, $80 per barrel perhaps… ? ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [March 10, 2003, 1:02am UTC](https://boards.straightdope.com/t/why-are-gas-prices-so-high/159941/29 "2003-03-10T01:02:24Z")
> [@](#): > > \*Originally posted by I, Brian \* > \*\*Don’t worry about prices though - in a few days the US and UK invade Iraq, assuring themselves of control over the second largest oil fields in the world as under their control. Result: US consumers get lower prices. (Us Brits won’t, tho’.) > > Does that make you happier? \*\* Whoever ends up controliing Iraqi oil is going to sell it at the prevailing world rate to make money. It’s not about the oil per se; it’s about the money that can be made selling the oil. To think that Iraqi oil will be loaded on US tankers and given to US refineries for anything less than market prices is naive. So US prices relative to UK prices will remain the same; but instead on enriching a tyrannical despot, it will go to the multinational oil company who made the biggest campaign contribution to the Republican party. ---
**Author:** ![mangeorge](https://avatars.discourse-cdn.com/v4/letter/m/d78d45/32.png) [@mangeorge](https://boards.straightdope.com/u/mangeorge)\ **Post date:** [March 10, 2003, 3:00am UTC](https://boards.straightdope.com/t/why-are-gas-prices-so-high/159941/30 "2003-03-10T03:00:22Z")
😃 ---
**Author:** ![Ringo](https://avatars.discourse-cdn.com/v4/letter/r/779978/32.png) [@Ringo](https://boards.straightdope.com/u/Ringo)\ **Post date:** [March 10, 2003, 3:08am UTC](https://boards.straightdope.com/t/why-are-gas-prices-so-high/159941/31 "2003-03-10T03:08:21Z")
> [@](#): > > …it will go to the multinational oil company who made the biggest campaign contribution to the Republican party. That’s a little naive as well. The new Iraqi government will probably handle it as it’s done in most countries. They’ll announce a round of bidding for Concessions for development and exploration in certain areas. The government, a speculative seismic company, or possibly a group of interested companies will acquire regional 2D seismic grids in the subject areas. The government oil ministry will assemble whatever pertinent additional geological, geophysical and engineering data they have and make it vailable to all interested parties for some period of time before the bid deadline. The oil ministry may set some minimum conditions (like royalty), and the players will bid. Companies that are already in there, like Total Fina Elf and Sayunefte, may well bid along with those who’d probably like to be in there, Like BP, Exxon and Shell. Different companies will have different perceptions of what various areas are worth, and their proposals will reflect that. The oil ministry will take the deal it likes best. As far as who will be bidding, well, I get invitations to bid on foreign concessions and my employer has never done anything outside of the U.S. and Canada; it’s often pretty open. And the world will paying more than the usual amount of attention. ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [March 10, 2003, 4:22am UTC](https://boards.straightdope.com/t/why-are-gas-prices-so-high/159941/32 "2003-03-10T04:22:05Z")
> [@](#): > > \*Originally posted by Ringo \* > \*\*That’s a little naive as well. The new Iraqi government will probably handle it as it’s done in most countries. \*\* If we had [any idea what form the new government will take](http://www.miami.com/mld/miamiherald/5315267.htm), that might be a valid assumption. But since Bush is staying mum about the details, I don’t think we can assume anything. I tell you what, in five years, let’s follow the oil money trail, and see if I’m not right. ---
**Author:** ![Ringo](https://avatars.discourse-cdn.com/v4/letter/r/779978/32.png) [@Ringo](https://boards.straightdope.com/u/Ringo)\ **Post date:** [March 10, 2003, 4:30am UTC](https://boards.straightdope.com/t/why-are-gas-prices-so-high/159941/33 "2003-03-10T04:30:29Z")
Right. Agreed. Five years from today, we meet back here on this thread and track it. 🙂 ---
**Author:** ![handy](https://avatars.discourse-cdn.com/v4/letter/h/b5a626/32.png) [@handy](https://boards.straightdope.com/u/handy)\ **Post date:** [March 10, 2003, 4:07pm UTC](https://boards.straightdope.com/t/why-are-gas-prices-so-high/159941/34 "2003-03-10T16:07:13Z")
“Whoever ends up controliing Iraqi oil is going to sell it at the prevailing world rate to make money.” What if he sets his oil fields aflame? ---
**Author:** ![Vortex](https://avatars.discourse-cdn.com/v4/letter/v/fbc32d/32.png) [@Vortex](https://boards.straightdope.com/u/Vortex)\ **Post date:** [March 11, 2003, 12:44am UTC](https://boards.straightdope.com/t/why-are-gas-prices-so-high/159941/35 "2003-03-11T00:44:31Z")
Is no one going to address my side quesion? (By the way, I can confirm that there were indeed shortages at some gas stations in Phoenix. They closed off these stations with caution tape and signs that read “closed” or “no gas.”) ---
**Author:** ![mangeorge](https://avatars.discourse-cdn.com/v4/letter/m/d78d45/32.png) [@mangeorge](https://boards.straightdope.com/u/mangeorge)\ **Post date:** [March 11, 2003, 1:09am UTC](https://boards.straightdope.com/t/why-are-gas-prices-so-high/159941/36 "2003-03-11T01:09:58Z")
> [@](#): > > \*Originally posted by Vortex \* > \*\*Is no one going to address my side quesion? (By the way, I can confirm that there were indeed shortages at some gas stations in Phoenix. They closed off these stations with caution tape and signs that read “closed” or “no gas.”) \*\* Somebody’s screwing with you, **Vortex**. There is no supply shortage of gasoline. Storage tanks are full, and distributers would be more than happy to rush tankers to Phoenix. Esp. at these prices. Something else is afoot, I think. 😉 ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [March 11, 2003, 1:31am UTC](https://boards.straightdope.com/t/why-are-gas-prices-so-high/159941/37 "2003-03-11T01:31:14Z")
> [@](#): > > \*Originally posted by handy \* > \*\*“Whoever ends up controliing Iraqi oil is going to sell it at the prevailing world rate to make money.” > > What if he sets his oil fields aflame? \*\* [Halliburton will put it out.](http://www.forbes.com/home_europe/newswire/2003/03/06/rtr900049.html) > [@](#): > > **Vice President Dick Cheney served as Halliburton’s chief executive officer from 1995 to 2000.** Anybody see a pattern here? ---
**Author:** ![Dr\_Paprika](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dr_paprika/32/3042_2.png) [@Dr\_Paprika](https://boards.straightdope.com/u/Dr_Paprika)\ **Post date:** [March 11, 2003, 2:01am UTC](https://boards.straightdope.com/t/why-are-gas-prices-so-high/159941/38 "2003-03-11T02:01:07Z")
Can’t believe the thread has got this far without using the word “gouge”. Gas price in CANADA, generally higher than the US, is about $2.00 US ($1 US=0.68 CDN). ---
**Author:** ![TBone2](https://avatars.discourse-cdn.com/v4/letter/t/6a8cbe/32.png) [@TBone2](https://boards.straightdope.com/u/TBone2)\ **Post date:** [March 11, 2003, 3:06am UTC](https://boards.straightdope.com/t/why-are-gas-prices-so-high/159941/39 "2003-03-11T03:06:54Z")
> [@](#): > > \*Originally posted by Fear Itself \* > \*\*[Halliburton will put it out.](http://www.forbes.com/home_europe/newswire/2003/03/06/rtr900049.html)Anybody see a pattern here? \*\* Damn, I thought we had a pretty good discussion going here! Thanks, dude. ---
**Author:** ![DesertDog](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/desertdog/32/11503_2.png) [@DesertDog](https://boards.straightdope.com/u/DesertDog)\ **Post date:** [March 11, 2003, 3:43am UTC](https://boards.straightdope.com/t/why-are-gas-prices-so-high/159941/40 "2003-03-11T03:43:05Z")
> [@](#): > > \*Originally posted by mangeorge \* > \*\*Somebody’s screwing with you, **Vortex**. There is no supply shortage of gasoline. Storage tanks are full, and distributers would be more than happy to rush tankers to Phoenix. Esp. at these prices. > Something else is afoot, I think. 😉 \*\* You’re right. The other factor is that the winter gas is about out, no one’s brewing any at the moment, and they can’t sell summer gas for another couple weeks. The storage tanks around here may well be full, but it’s the wrong kind of stuff. The governor is considering dropping the restriction on summer gas, but that might piss off the Feds. Even at that, though, we’re a bit cheaper than California – $1.85 to $2.00 per for 87 octane. Me, I’m glad I’m driving a CNG Honda. DD [Previous page](https://boards.straightdope.com/t/why-are-gas-prices-so-high/159941.md?page=1) [Next page](https://boards.straightdope.com/t/why-are-gas-prices-so-high/159941.md?page=3)