Gasoline And Oil — Why You’re Paying Too Much At The Pump

(See also Hypermiling and Saving Money on Gas for additional information and gas-saving tips)

Global Warming isn't the only reason to start reducing our consumption of gasoline.

In May of 2008, gasoline prices had climbed to unprecedented highs and oil prices were rocketing past anything that’s ever been seen in the past, the United States Congress finally called oil execs on the carpet to explain why.

One by one, executives from each of the five largest oil companies (Exxon Mobil, Conoco Phillips, Shell Oil, Chevron and BP) wrung their hands, shook their heads, and explained that the law of “supply and demand” was responsible for the high prices at the gas pumps.

The cry of “the market sets the price” may have seemed like an easy out for these oil execs. But it takes only a tiny bit of research to see that supply and demand have little to do with the reason we're paying higher and higher prices for every fill-up.

In earlier years, when U.S consumers were shocked by prices at the pumps, that shock was always caused by a disruption in supply. (In 1973, for example, an Arab oil embargo caused gas shortages that resulted in high prices and long lines at the pumps.)

The late 70’s saw another spike in gas prices with yet another shortage, and once again the law of supply and demand prevailed.

The next price hike in the U.S. (which was caused by a real shortage) came in 2005 when Hurricane Katrina hit the Gulf Coast oil refineries and devastated production.

It was from that point forward that a new trend in pricing began to emerge: one that had little to do with real world supplies and real U.S. demand.

It had more to do with Wall Street commodities traders who were pumping money into futures contracts, a move that pushed prices ever higher.

By late in 2005, oil had reached a then-staggering $70 a barrel. This caused conservative publication The National Review to warn the investors that the manipulated “oil bubble” was surely about to crash and create a downturn in the economy (which would make the dot com bust of the 90’s “look like a picnic.”)

Of course, as we all know now, prices did not crash. Much to our surprise and consternation, they did, in fact, continue to rise and rise and rise.

Oil prices have now passed $130 a barrel. And this is despite the fact that there has been no disruption in supplies, no rising surge in demand.

In fact, the oil industry’s own statistics indicate that world oil production is up while demand in the U.S. is on the downturn. And U.S. gasoline reserves are at their highest levels in 15 years.

That’s because the American motorist, faced with sky-high prices at the pumps, has actively embraced conservation.

But the resulting downturn in U.S demand hasn’t delivered any relief at the pumps, or any lowering of prices. In fact, gas prices are getting higher every day.

So, supply and demand is not driving those prices we pay at the pump.

What is?

Just as The National Review warned in 2005, oil and gas prices are being manipulated by investors who’ve pulled their money out of the busted real estate market and poured it into other commodities: like corn, gold and oil.

As the prices for those commodities climb, the investors who bought low are selling high. And it’s the American consumer who’s paying the price.

So where does that leave you?

What can you do to save money on gas? If your car is an essential part of your life (or even if it isn't), this effects you, no matter what the “reasons” are.

A modern solution to this is called “hypermiling.”

What is the actual definition of “hypermiling?"

A simple definition of “hypermiling.” is “a system of improvements, tweaks, and techniques used to reduce fuel consumption, save money on gas, and get maximum mileage per gallon of gasoline.”

Hypermiling has become an increasingly popular method of dealing with this gas crisis. It includes driving techniques, automotive tuneups and tweaks, basic steps to take before you even start your car, and even lifestyle changes.

There is also the possibility of using alternative fuels in your vehicle.

For more information on hypermiling, you might want to get a simple E-Book which will explain hypermiling techniques fully..

At Hypermiling and Gas-Saving Tips you can find an E-Book which is simple and clear, and will give you step-by-step instructions and techniques that you can apply in order to save money on gas.

There is another reason we might all want to start to learn and practice hypermiling - and that's the environment. Global warming is a real issue and it seems to be increasing exponentially. This video gives you some idea of what is occurring:

You can find gas-saving tips and more information at Living Clean.

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