High Gas Prices

Gas prices in the United States are breaking record highs. Millions of people need fuel drive to work, to school, and to the bank, to accomplish daily commitments. Some wonder how gas prices got so high. Many reasons like high taxes and demand, give strong evidence of the causes of high gas prices. The effects of elevated gas prices cause Americans financial woes and lifestyle inconveniences.

Many people assume the reasons for high gas prices, but are unaware of the significant explanations. Most people would speculate the culprits for raising the gas prices are the oil refinery companies because their profit equals billions, but in reality our elevated dependency on gasoline, higher taxes, and environmental regulations are the prominent causes.

Oil is an important element of American lives. Oil gives mobility, provides energy for homes and workplaces, and offers benefits from oil-based products, like plastic. "In 1993, our dependency for foreign oil was 46-percent. In 2000, it was 56-percent and projected to be 65-percent by 2020" which shows our enormous need for oil. (Hutchinson. 2000)

Many are unaware of the affects high taxes have on gasoline prices. "Federal taxes account for nearly 20 cents per gallon of gasoline sold. State and local taxes bring the total to 42 cents per gallon. Analysts estimate consumers would save a whopping $67 billion in one year if gas taxes were eliminated." (Paul. 2000) Not all States impose the same number of taxes, especially noticeable in the Midwest which has higher taxes than average.

In addition to these causes, the primary reason for price increases is environmental regulation. One example of regulation is the restriction of drilling for oil in Alaska which would considerably increase the gasoline supply up to 20 percent and reduce costs. (Simpson. 2005) Oil drilling in Alaska would increase domestic production and supplies, therefore, lowering gasoline costs. Another regulation is reformulated gas which is most dominant in the Midwest. Reformulated gas (RFG) is required in high pollution areas to help reduce vehicle emissions. RFG results in extra expenses for the refining process and for the transportation of ethanol when required, as it is in the Midwest. Additives like MTBE, available at refineries, could be substituted for ethanol saving time, shortages and costs which have been estimated to add a substantial 25 cents to each gallon of gas. Although ethanol reduces our dependency on oil, it is not as powerful in energy, and large amounts are needed to fuel vehicles

After understanding some of the major causes of high gasoline prices, the effects can be fully embraced. Americans are not just peeved by the inconvenience of paying more at the pump; some are experiencing financial hardships. Paying extra for gas may not be putting everyone in debt but it has affected his/her lifestyle choices. American families are traveling less, meaning less well deserved leisure time and fun with the children. People are highly depend on transportation to earn a living and accomplish daily errands. The majority of Americans are driving less because of high gas prices. "The higher prices have affected low-income people most, with 67-percent of those making less than $30,000 a year spending less time on the road, compared with 34-percent of those with incomes over $100,000." (Poll. 2006) Other Americans are spending less on other things, using credit cards and saving less. Many people say if the price stays at $3 per gallon or increases, they will drive less and cut back even more to accommodate their fuel needs. When more money is spent on gasoline and less on goods, people begin to worry the economy, which strives from consumer spending, may suffer

Some people do not agree high gas prices significantly affect American families. The fact Americans do not have alternatives, in terms of substitutions for fuel, keeps the dependency and demand high. Thus, people will continue to pay the prices. "The latest estimates, based on a comprehensive study released in 2002, predict that if prices rose from $3 per gallon to $4 per gallon and stayed there for a year, purchases of gasoline in the United States would fall only about 5 percent." (Goolsbee. 2005) Some people believe only major affects on American families would be if the increase was immense and lasted at least five years. The evidence discussed proves their claims wrong.

I disagree with the opposing statement that Americans are not significantly affected and would not be until something traumatic occurs. I fall in the low-income range of less than $30,000 per year. Many people like me are affected in major ways. According to the U.S. Census Bureau, the three-year-average median household income for all states in 2002-2004 is $44,473 per year. (US Census 2004) Many live paycheck to paycheck struggling to get the bills paid, providing shelter, food and necessities, and still finding enough