Sunday, July 12, 2009

What's Up With Recent Gas Prices ?

By Adrian Fletcher

Will gas prices ever go down? That is the question that is on the mind of just about every car owner but also many business owners too. It might come down a bit but the chances of it returning to the levels of around a year ago are unlikely. Everyone is feeling the pinch, especially individuals who rely on their cars to commute to work but can't justify spending large amounts on gasoline bills.

Reduced demand for gasoline will need to come from greater fuel efficiency, reduced driving mileage, and the development and deployment of new types of fuel. Supply will then come into balance with demand, keeping gas prices at a stable, if relatively high, level.

With this said, requirements for refining gasoline to make it more clean-burning prevent gas prices from ever falling significantly, and the emission standards set by law continue to become stricter. Oil Refineries will require more capital to expand and do routine maintenance to keep up with demand. You can be sure that oil companies will first point to these reasons for rising fuel prices.

So will the government act to regulate the gas price? In some countries they have tried this but it has proved difficult to implement given the varied political agendas at stake and the vast amount of taxes that are applied to gasoline use. So while the prices of everything in the United States skyrockets due to the cost of fuel it is up to the people to make the difference if they want gas prices to go down.

Rising prices will make people drive less and be more frugal with their money which will impact the economy negatively. As food becomes more expensive, people tend to buy more unhealthy processed foods with lower price tags, resulting in more health issues. This in turn could trigger larger insurance premiums and bigger health care bills. People will need to start planning and consolidating trips to maximize fuel economy and efficiency.

The most important thing people can do is to work the democratic process. Make sure your voice is heard by your elected officials. Everyone can complain to their friends and family but contacting your elected official can initiate real change. After all, your tax money pays their salaries, so they should be working for you to represent your interests. The problem is that they are also listening to oil lobbyists, but hearing from their constituents in a large group can make a difference.

Will gas prices ever go down to manageable levels for most people? It seems unlikely, certainly in the near future given the outlook for the economy. A small decrease will be negligible if at all, but if you add your voice to the increasingly large group of people seeking change, it is possible that our national leaders may listen and take meaningful action to stop run-away gas prices.

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