Apr 7th, 2012 | By | Category: Senior Finances

Seniors Learn Cause of High Gas Prices

We senior citizens hear all kinds of stories about what and who is causing gas prices to skyrocket.  Some accuse Wall Street, or Big Oil, or President Obama or the Fed or Environmentalists or the EPA.  Some politicians even tout their ability to single-handedly bring gas prices down.

SCJ did some research to try to find what or who is actually primarily responsible for the cost of gasoline to get so high.  We discovered OPEC carries most of the responsibility for the price of gasoline.  You can read the full NPR report here.

There is a large discrepancy between global oil production and where oil is found:  “Members of the oil cartel sit on top of nearly 80 percent of the world’s conventional crude reserves. Yet they account for only a third of global oil production.”  (NPR, 4/2/2012)

The OPEC countries have no interest in nor any reason to produce more oil.  The reason lies in political realities in countries in the Middle East.  Revolutions occurred in countries like Libya and Egypt because the gap between the wealthy oil barons and the rest of the citizenry was so great.  In order to keep it’s growing citizen population from revolting, the House of Saud needs to have more and more money available for their well-being.  (There is no income tax in Saudi Arabia).  So instead of selling more oil to raise money, the oil cartel sits on its oil and raises prices.

Answers Lie in Alternative Fuel

The oil cartel very effectively responds to any moves made by other countries to manage fuel supplies.  They drill and supply oil  based on keeping the demand, and therefore price, as high as possible.

The NPR report says this about the answer:

“To change this vexing dynamic, consumers must be able to substitute for petroleum by purchasing competing fuels, like alcohol fuels, biodiesel, natural gas or electricity, if they are less costly on a per mile basis. But as long as our vehicles are able to run on nothing but oil, keeping oil monarchs on their throne will remain our national side job.” (NPR, 4/2/2012)

So the next time we start to blame anyone in the United States for high gasoline prices, remember OPEC and the power it holds.

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