There is nothing anyone can do about high gas prices

There is very little anyone can do about high gas prices. Photo Credit: Trevor MacInnis/Wikimedia Commons/CC-BY-SA

Gas is getting more expensive and many people are very angry about it. However, there is no point in complaining as there is very little anyone can actually do about gas prices and no, it doesn’t matter who one votes for.

Definitely don’t listen to candidates

Some of the American public believes whomever is currently president has some control of gas prices. Candidates seeking office do too, according to the Washington Post; now-President Obama blamed then-President Bush for high gas prices while on the campaign trail. Obama is getting blamed now.

However, according to the Energy Information Administration, 66 percent of the cost of gasoline is the cost of crude oil alone. A further 15 percent is the costs of refining; another 8 percent is in the cost of getting it to gas stations. Only 11 percent is down to taxes, which is under government control; there is little any elected official can do.

Pricing is out of our hands

The big reason why gas prices are still sending people running for payday loans to fill up the tank, according to AutoBlog, is that the oil trading industry has changed the rules.

According to the National Association of Convenience Stores, the benchmark type of oil, defined by its chemical properties and composition, for United States markets used to be West Texas Intermediate, a high-quality crude oil easily refined into gasoline or diesel. However, in early 2011, commodities traders decided they’d had it with WTI and started trading Brent Blend, a crude oil type from the North Sea, as their benchmark.

The reason why? Brent is more expensive than WTI. Higher prices mean more money for investors. According to Fortune magazine, Brent commands a premium over WTI, as much as $20 per barrel.

Less demand driving price up

Actual gas demand is low. According to Businessweek, the demand for gas is lower than it was in 1997. People are driving less and driving more fuel-efficient cars. As a result, according to the NACS, WTI inventories are sitting in storage in Cushing, Ok., the site of the national “clearing house” for crude oil. That’s where contracts for parcels of oil from producers are bought by refiners, though shipments often change ownership several times.

Less demand means more WTI is sitting in storage, meaning it is less valuable. Also, more WTI is being exported. In fact, the United States became a net exporter, meaning more is exported than sold domestically, of oil in 2011, the first time that has happened in 60 years, according to Fortune.

Part of the reason for Brent becoming the new standard is that it can be shipped directly from the North Sea, without relying on pipelines in Cushing, Ok., which has only a few pipelines to ship oil from, according to AutoBlog. Instead of storing the oil until it can be sold domestically, producers are selling it overseas.

What can be done

Despite the wisdom (or perhaps lack of it) of former vice presidential candidates, more drilling won’t resolve the issue. According to the Energy Information Admnistration, the U.S., in fact, is producing more oil, more than 6 million barrels per day, today than it was 12 years ago. Not only that but, according to the Washington Post, the number of oil rigs nationwide has doubled since 2009. Clearly, it is being done and isn’t working.

As the decrease in demand has shown, driving less doesn’t work; producers will simply increase exports abroad. Driving more won’t do it either, as producers won’t sell oil domestically until it is more profitable to do that than selling it abroad. The price of gas is clearly in the hands of powers far beyond the control of the public. Basically, little can be done except opting out of oil entirely. Electric cars and biodiesel are probably the best bet for personal transportation, if one wants to avoid being gouged by Big Oil Futures.