Price Of Petroleum

Products that use petroleum surround consumer’s everyday. Take a look around: The paint on the wall, the slippers you wear to keep your feet warm, the toothpaste you use to get that smile looking vibrant, the diapers babies wear, the cigarettes you may or may not smoke, the asphalt that you drive on everyday to get to your intended destination, the pills you take for your ailments and the lipstick women wear everyday; these all contain petroleum-based ingredients. “About one million bbl. a day---roughly 5% if U.S. consumption- go toward the manufacture of plastics, detergents and other non-fuel products.” “Researchers are working on cheaper, eco- friendlier alternatives to oil-derived ingredients but with the prevalence of petroleum that is a big challenge” (Myers). Even though this is a macroeconomic issue dealing with OPEC and our vast economy, it has an effect on a microeconomic scale. The soaring oil prices are affecting consumer’s decisions to carry on with every day activities such as travel and buying goods.

The article that is in review predominately criticizes and puts down President Bush; blaming him solely for the rise in oil prices, while in reality there are no quick fixes in this situation. Although there are several economic analysts that this economy can survive the high-priced oil; however, the house speaker, Dennis Hastert, retorted with the comment “Republicans have passed good legislation to combat rising gas prices, increase fuel supply, limit the types of fuel blends and dealing with fuel shortages in the wake of hurricane Katrina” (Soaring). According to the article “more than two-thirds of Americans say they are experiencing financial difficulties due to higher prices” (Soaring). This is because during the Bush presidency, “the big oil has won big. Prices have doubled, profits have tripled and oil companies already are making historic, obscene and record profits” (Soaring). Already, here in Indiana the average cost at the pump calculates to: “Regular $2.86 gal, Premium $ 3.18 gal and Diesel $2.93 gal” (Fuel).

In this case the oil that is consumed here in the United States proves to both of supply and demand. The demand is always going to be high because we are a nation that frankly could careless about how we use our fossil fuels, “production capacity in the OPEC oil cartel ranges from 1.5million to 1.9million barrels a day, in a world that consumes at least 85 million every day” (Analyst). At the same time, there is ample supply here in the United States, which means that we have to trade or import the fuel from other countries. Especially now, the United States is fighting this war--- we get most if not all our oil from overseas, so the foreign governments can and will raise the price because there is always the threat of “Iran, the world’s fourth-largest oil producer, which might respond to the threat of economic sanction by withholding oil from the market” (Analyst). From a young adults point of view, that totally sucks because not only are you working twice as much, you are pretty much working so that you can get to work, given the price of gas these days. On a more microeconomic scale, it is hard for students here at Tri- State University to save enough money to go home, if they live a reasonably far distance from Angola. Some students average about seventy five dollars for a round trip to and from school and that is a lot of money for a supposed broke college student to come up with, even having a job.

On a personal note, it seems like a waste of money, I love going home but I personally do not feel like paying that much to get home. Back home in the city of Valparaiso, IN; starting May 1st, will be limiting the amount of gasoline they will issue to their city cop cars. They are thinking of expanding their fleet by either having the officers ride a bicycle or walk. Overall, cab drivers, deliverymen, etc., will also come under this budget cutting because it will no longer be profitable for them. People, who are working for minimum wage will find that getting to work costs more than they are receiving as a wage. Yet, in another perspective it seems as though our government is not really doing anything to help consumers over here in the United States as far as the price inflation at the pumps, the government figures because of our lifestyle we, as consumers, will keep paying the prices at the pump for a while because it is hard to change lifestyles but it can be done and for that much money it should be done.

Spanning all across the United States, we have to take into consideration the disastrous event that happened this past fall, Hurricane Katrina which had a deep impact on our economy as a whole. The companies that were affected by Hurricane Katrina are, in fact, investing a lot of money back into the refineries.