Why Are Gas Prices So High? And 4 Things You Can Do To Lessen The Impact
If you've filled your gas tank anywhere in the US in the past few days, you've paid at least $4 per gallon. In some areas this is 10 cents more per gallon than just two weeks ago. This amounts to a $100 billion increase spent on fuel over the past few weeks, or $33 more spent by every man, woman and child in America. That's a lot more money coming out of your pocket. And it's not just when you fill up your car. It shows up in the price of groceries (the stores pass the fuel cost through to you and I), in the price of services and in the price of gas and electricity for our homes, especially if you're not on fixed rates.
Is this spike in cost justifiable? The answer is a big NO.
The only reason we hear for the gas price increase is the unrest in the Middle East (especially in Libya right now) but two wrong assumptions are made when this reason is given:
1. The Middle East Supplies the Bulk of US Oil: Libya only supplies about 1% of US crude. Saudi Arabia supplies 11% and other Middle East countries supply another 7%. The US actually gets the bulk of its oil supplies from the Americas (Canada, Mexico, Venezuela etc). And Net Imports of fuel have been reducing. But we are made to think that the bulk of supply comes from the Middle East.
2. Crude Oil Price Increase = Pump Price Increase: Gasoline bought at a pump today was actually drilled 3-6 months ago. It was refined, converted and stored. So today's unrest in Libya should technically not affect pump prices until this summer. But the neighborhood gas station (which actually makes its money when you buy the Snickers at the station convenience store) reflects the 'gas price increase' only 2 weeks after unrest starts.
So what can you do to reduce the impact gas prices have on your wallet?
a) Drive Less: Take public transportation. CTA and Metra systems cannot jack up bus and train prices on short notice like gas stations. b) Lighten the Load in Your Car: Get the junk out of your trunk and you'll use less gas. c) Shop Local: Buying locally sourced produce requires less travel and therefore, saves on fuel costs. Plus the food is fresher and better for you. d) Carpool: Get to know your neighbors. Drive to work with a co-worker, even if it's just one day each week.
How are you reducing the impact of increasing gas prices?
About the Author
Seyi Fabode has several years of experience in the electricity and IT industries and is a huge advocate for customer choice. Seyi is the Founder of http://www.Power2Switch.com an electricity price comparison, cost and usage reduction site for residential and small business customers). He has an 'MBA from the Booth School of Business University of Chicago and can be reached with any questions @Power2Switch
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