Why is Gas so Expensive

As gas prices approach the five dollar mark for the July 4 weekend in the United States, many people are asking this important question - what is the cause of high gas prices? It's an important question, but unfortunately very difficult to answer. With so many factors at play, rising gas costs are a bit of an economic enigma. Nonetheless, this article attempts to answer that question with a few possibilities.

One of the most fundamental concepts in economics is supply and demand. The high gas prices we see today are the result of a simple supply and demand problem. Crude oil is in high demand because the entire global economy needs it to survive. Unfortunately, our reliance on crude oil and other fossil fuel based energy sources is so high, it will take major changes in our first world lifestyles to make an impact.

The ironic situation behind high gas prices today is the development of third world countries. Yes, it is definitely a good thing that other parts of the world besides the US and Europe are developing their economies and helping their citizens advance into the future. The downside of this process is more people throughout the world want oil. Thus, as mentioned above, the law of supply and demand drives prices higher and higher.

Yet another problem in this complicated gas situation is the current scarcity of standard energy sources. Fossil fuels are a non-renewable energy source. This also just happens to be the source of crude oil and thus gasoline. As these sources continue to get depleted, the lack leads to more pressure on demand. And so the cycle continues.

Some people think there is a conspiracy behind high gas prices. The suggestion Is that energy companies are evil money mongers intentionally driving up gas prices. In this argument, the price of gas is fixed by people behind the scenes who just sit back and count the money. Personally, I am not so sure this is the truth. Of course, it is a possibility, and I am sure that energy companies are making a big profit in this current situation. But I do not think it would benefit our government or mega corporations to put our entire country (and many others) in such a dark economic cloud.

The reasons behind expensive gas are not entirely clear, but the fact remains that finding alternative energy sources and conserving gasoline will continue to become increasingly important in the years ahead.