Gas Prices Rising Essay Research Paper It

Gas Prices Rising Essay, Research Paper

It won’t be a rerun of the 1970’s, when long lines at the gasoline pumps spelled big trouble for politicians, but soaring gasoline prices are expected to become a serious issue in the 2000 election campaign by early summer.

Since last month gas prices have rose at the rate of 10 cents every week. Prices will continue to increase over the next month and threw the summer. Forecasters expect oil prices and gasoline prices to keep rising through the spring, no matter what the administration or congress does, and oil companies traditionally raise gasoline prices sharply just before the memorial day weekend, the start of vacation season.

Surging petroleum prices pushed the inflation rate in February to its highest level in three years, the Labor Department reported yesterday. Most of last month’s increase of 0.5 percent; the largest one-month rise since last April; reflected the run up in petroleum prices. Gasoline at the pump averaged $1.42 a gallon, up from $1.36 in January.

During the past month, Charles Winter has boosted the price of gasoline at this Burien service station from $1.24 a gallon to $1.56 a gallon. Winter says he has no choice. Each week a tanker truck re supplies Charlie’s Exxon, and each week he gets a higher bill for the fuel. “A lot of my customers are worried about this, but I don’t know when it’s going to end,” Winter said. On Tuesday, at north 205th Street. In Shoreline, most drivers were willing to endure a 15-20 minute wait to fill up their tanks with $1.41 a gallon regular unleaded gasoline. Prices elsewhere on 205th were about $1.55 a gallon.

The rapid price rise reflects a dramatic tightening in world oil markets from a year ago when U.S gasoline prices averaged $1.05 cents a gallon. The turnaround in oil prices began last year as the Organization of the Petroleum Exporting Countries ( OPEC ); after year of attempted cooperation; finally agreed on production limits. And the U.S , the price surge has been accelerated by cold weather in the Northeast, boosting the need for heating oil. Problems at refineries have also tightened gasoline supplies. As prices rise, pressure increase on OPEC to increase production. Much depends on a March 27 meeting, and U.S officials are optimistic producing mations will try to boost oil profits. As of this week, gasoline stocks stood at 197 million barrels, compared with 224 million barrels a year ago, according to the Energy Department. Crude oil stocks were at 286 million barrels, 50 million fewer barrels than last year and well below historic levels for this time of the year. In the past 3 weeks, refineries on average were running at about 85 percent capacity, compared with nearly 92 percent at the same time a year ago. Also crude prices were $12 a barrel year ago compared with $30 a barrel today. But while the prices will probably set records in purely numerical terms, they will still be 40 perent lower when adjusted fro inflation than they were at their all time high, in March 1981, the Energy Department said. And they will be 16 percent lower when adjusted fro inflation than they were late in 1990, during the Persian Gulf War.

For the 11 OPEC countries, oil is a vital resource, a black gold that has turned parched lands and jungles into billion-dollar economies with unfathomably deep pockets. But OPEC’s members also include some of the most economically troubled countries on earth, where oil profits prop up regimes and provide the salve that sooth s social and political tensions; as long as price per barrel is high. While each case is unique, there is a common thread among the OPEC nations: they are “one crop” countries where oil virtually the only export. Its easy and unbridled profits lead to corruption, abuse and, even in the most transparent countries, a tendency to ignore the development of other economic sectors. ” They use the money to keep themselves in power, buying arms, building mega projects just for show; doing everything they shouldn’t be doing rather than creating jobs and investing in other employment sectors,” said Robert Ebel, director of the Energy and National Security Program at the Washington-based Center for Strategic and International Studies. Since OPEC was started in 1960 with five founding members, several other oil-producing countries have realized the benefits of belonging to an exclusive club that fixes crude production and keeps exploration of new fields to a minimum in order to maintain high profits. ” There’s strength through togetherness,” said the Center for Strategic and International Studies’ Robert Ebel. ” They can look back now and see what lind of situation they were in last year with oil below $10 a barrel. It gives them confidence in their ability to limit production in the future.

Oil exporting countries may boost production soon to ease the acute shortage that has seen crude prices climb nearly $32 a barrel, but the additional oil, even if pumped immediately,” would undoubtedly be too late” to keep gasoline prices from rising, an Energy Department report said. No matter what production decisions are made, “retail gasoline prices are poised to surge to unprecedented levels before the spring is out,” the report said. It said U.S gasoline stocks were ” alarmingly low,” and that the country is” moving into uncharted territory” as far as gasoline markets are concerned.

The analysis cautioned that prices could spike much higher in some parts of the country, including California, which historically has had higher prices, making $2 a agllon regular gasoline a probability in some areas. Gas prices in Virginia are about 6 percent below the national average. AAA’s February average for Virginia was $1.29 for a gallon of self serve regular, compared to $1.39 nationally. A gallon in Hampton Roads averaged $1.32. Gasoline prices in New Jersey tend to be lower because of lower taxes and the proximity to major refineries