Once upon a time Americans hopped into their cars on warm spring days and took long drives to admire the beauty of nature. Teenagers took joy rides around town to meet friends and rode from one “hot spot” to another. Those were the days when gas prices were affordable to the average American. Over the past few years, gas prices in the United States have been on the rise. What is causing the increase in gas prices?
To understand the increase in gas prices, one must first identify the distribution of dollars paid per gallon at the pump. According to the U.S. Energy Information Administration (eia) in 2010, the annual average paid at the pump consisted of 68% crude oil, 7% refining, 10% distribution and marketing, and 15% taxes (see Fig.1). This shows an increase of crude oil over the 2000-2009 average of 51%. (e. I. Administration)
Currently, the most important factor in the rise of gas prices is the increasing cost of crude oil. Unfortunately, the United States has three percent of the world’s oil reserves. (Horsley) In 2009, the United States was third in crude oil production as well as the world’s largest petroleum consumer. (e. I. Administration) Such consumption required and still requires the United States to import petroleum/crude oil from other countries.
Mainly, the United States imports petroleum products and crude oil from Canada 23.3%, Venezuela 10.7%, Saudi Arabia 10.4%, Mexico 9.2%, and Nigeria 8.3%. (e. I. Administration) In addition, approximately 77 other countries import to the United States. (e. I. Administration)
Worldwide, there are many factors contributing to the increase in cost per barrel. Most recently, Libyan rebels, inspired by the success of their Tunisian and Egyptian neighbors, are uprising against their leader, Moammar Gadhafi. Gadhafi became the leader of Libya in 1969. The rebels want to finally be free of Gadhafi and have been protesting against his regime. In response to the rebellion, Gadhafi has amassed a military force that includes regime supporters and hired mercenaries to fight against the rebels.
This has caused an upheaval all throughout Libya’s oil industry causing turmoil within the National Oil Corporation (NOC). “Along with smaller subsidiary companies, the NOC accounts for around 50 percent of the country's oil output.” (Reuters) In addition, major foreign international oil companies operating in Libya have evacuated employees. These companies include Eni, StatoilHydro, Occidental Petroleum, OMV, ConocoPhillips, Hess Corp, Marathon, Shell, BP, ExxonMobil, and Wintershall, a subsidiary of chemical company BASF. (Reuters)
Meanwhile the North Atlantic Treaty Organization (NATO) has decided to enforce the no-fly zone over Libya and protect citizens. As the United States, United Kingdom, and France prepared for action against Libya under the U. N. resolution, the cost of crude oil per barrel rose to $103.66. (Press)
The United States launched cruise missiles against Gadhafi’s...