Last Friday’s Daily Texan’s article, “Pinch at the Pump,” made some interesting points about gasoline price increases. Many students complain that the price of fueling their vehicles has doubled and that, in turn, has affected their budget for other necessities. Amanda Sims even called the price increases as “ridiculous.” Tim Taylor, a petroleum engineering senior lecturer, explained that increased consumption (demand) results in higher prices, and that the “only way to reduce the price of gas is to lower our consumption.” According the article supply is “struggling to keep up.” It does not distinguish between crude oil and refined oil in this statement, which is significant since OPEC says that there is no shortage of crude oil (see my post from last week). The article points out that although the oil has increased by 55%, gasoline has increased only by 20% from a year ago. Taylor claims that gasoline prices will continue to increase until they reach the 55% increase as well.
Some other interesting facts from the article:
“U.S. Americans make up 4.5% of the world’s population, but consume 25% of the world’s energy.”
“The majority, 68% of the high price of gasoline originates from the rising cost of crude oil.”
So, if “Americans have not significantly reduced their gasoline consumption,” I think that prices are not high enough yet. The ~$110/barrel should and will continue to grow. I don’t think that Americans should be shocked by $4/gallon gasoline, and I think that they should adjust their lifestyle and budgets for $6-8/gallon gasoline. Contrary to Amanda’s comment, the increase is not “ridiculous,” but necessary to implement change in the irresponsible US lifestyle.
Bingham, Amy. “Pinch at the Pump.” The Daily Texan. April 11, 2008.