Cause and Effect: U.S. Gasoline Prices

This ASP “Perspectives” paper examines the causes of America’s soaring gasoline prices. The paper underscores that the price of gas is intimately interconnected with crude oil prices, which are set by global markets. America cannot look for short-term solutions to what is a clear long-term problem.The paper cautions that hasty responses like banning speculation or releasing fuel from the strategic petroleum reserves may give a short term reduction in prices at the pump, but they will not solve the problem.America is critically dependent upon oil for its economic well-being and the only solutions are long-term methods to reduce the amount of oil we use across the country.

 

 

 

 

 

In brief:

  • The current price of gasoline marks the 3rd time in 4 years that prices have gone above $3.75 per gallon.
  • Gasoline prices are very closely correlated with the price of crude oil.
  • Oil prices, in turn, are tied to events largely outside of America’s control.
  • Oil prices depend on the interplay of supply, demand, and the perception of future changes in supply or demand.
  • The only way to reduce our vulnerability to spikes in oil prices is to use less of it

You can read the report here, or below

 

Cause and Effect – US Gasoline Prices

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