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Gasoline is on the minds of individuals around the globe- and it's hardly ever a pleasant thought. You aren’t alone if you have every caught yourself wondering just how gas prices have reached the high they are at currently and what exactly can be done to lessen the blow.
The gasoline itself, interestingly, only accounts for half the price you pay at the pump. Only 50% of the price is the cost of the crude oil. Where does the rest come from?
When taxes (14%), distribution and marketing (8%), and refining (28%) are factored in it becomes more apparent that automobile owners are paying for more than just gas at the pump. However, it is not widely known that U.S. gasoline prices are actually on the lower end of the price spectrum.
Nations such as Kuwait, Nigeria, and Egypt all have price per gallon prices set in at below dollar ranges. Venezuela comes in at the lowest, with a meager $0.12 per gallon. On the flipside, many European countries experience as much as $6.50 per gallon.
Why the drastic price variances? Countries such as Venezuela have oil producing companies owned by the government so the people of Venezuela get a break on gasoline prices. European nations such as Italy experience high prices because of taxes that discourage gasoline usage.
Consumers often ask why huge differences in a nation’s average gas price change, such as we have seen happen here is the U.S. Events such as war can dramatically increase gas prices, while finding a new pocket of oil beneath the Earth’s surface can lower them. Supply and demand also takes shape in some particular areas.
Gas prices in high populated areas will experience higher gas prices than those who live in a rural area. Certain areas of a nation can also experience different tax breaks than others.
In the midst of the fray, another term comes to light- price gouging. Price gouging is the act of oil companies or gas stations charging a much higher price that what should be charged. Price gouging is actually illegal, but it is hard to catch it in the act.
For instance, a gas station could report that the supply and demand merely gave them reason for raising prices. The best way to catch a price gouging company is to check the average gas price in the area if a local gas station is charging a great deal more, it is time to save the receipt and contact the attorney general.
Overall, the long term goal is to become independent of gasoline. If a better energy source could be found, perhaps a renewable one, then prices of energy could drop drastically. But that technology has a way to go before it is considered established.
Currently, attempts at curbing gas prices have come in the form of hybrid cars, ethanol plants, and alternative fuel sources. In the near future, it is expected that prices of gasoline will continually rise until an alternative is found. In the end, sometimes it is better to take a bike, or jog to a destination. It can often be much cheaper, and less stressful, than the dreaded visit to the gas pump.