Why Are Gas Prices So High? Hi everybody, MrEnergyCzar here. This video is about, “Why are gas prices so high?”.
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• We’ll hear what others are saying about high gas prices in a moment. Most of the reasons you hear have nothing to do with the price of gas. The number one factor is the global price of oil.
• The U.S. oil companies control a very small portion of the world’s oil reserves. Thus, they have little ability to influence the world oil price. The U.S. only has about 20 billion barrels of proven reserves which is about 2 percent of the worlds oil reserves. The nationalized oil companies produce and own most of the remaining oil in the world.
• People will blame high gas taxes. Actually, the 18 cent per gallon federal gas tax is very low. The state and federal gas taxes combined averaged about 50 cents in 2012. People don’t realize that the U.S. oil companies receive about 30 billion dollars per year in free overseas military services to protect the oil flows. If the free military service costs were passed to the oil companies, gas would be well over $12 per gallon. Oil has a huge free military subsidy that we all pay for.
• You’ll hear that we don’t have enough refineries as a reason for high gas prices. Actually, having more refineries won’t impact the global oil price much thus gas prices really won’t be impacted. No U.S. president has any real influence over gas prices because they can’t influence the world price of oil. This is practically impossible when you are only sitting on about 2 percent of the world’s reserves. President’s also can’t slow the growing oil demand from other countries like China.
• Lastly, something that you’ll almost never hear, is that the cheap easy conventional global oil production peaked in 2006. This is what peak oil is, not the running out of oil as many people mistakenly think. What has happened since this peak, is we’re replacing the cheap easy conventional oil with harder to get more expensive oil. We’re trying to make up for it by producing more expensive shale and heavy oil, fracking tight oil, ultra deep offshore oil and of course expensive tar sand oil. Let’s see what others are saying.
Sources/Links:
http://www.youtube.com/watch?v=yaVYcYAp980
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