The year of the gas price yo-yo

The year 2007 may be best remembered for the continuous rise and drop in gas prices. Prices seem to change on a daily basis as demand continues to rise. The high gas prices have affected the cost of food, the price of airlines, normal daily activities, and the general economy. According to the Department of Energy, gas costs are distributed into roughly five different categories. When someone pulls up to the pump, “37% goes to the crude-oil suppliers, 32% to the refining of crude oil, roughly 27% to federal and local taxes, 5% to distribution and marketing and then a few cents are added by station markup.” However, distributions vary from state to state due to taxes and the individual station. Another reason that gas prices vary so greatly from station to station is the distance from the oil refineries. Those stations that are closer to the Gulf of Mexico are more likely to have lower gas prices than those that are further away. Other factors can include war, weather, and political relationships. A recent development that has caused a rise in gas prices is the legislation to add more ethanol into fuels. The legislation came from the demands of environmental standards that have recently been placed on different parts of the country to help reduce smog. One major reason that gas prices change is because of the Organization of the Petroleum Exporting Countries (OPEC). This organization is a group of countries that controls almost half of the world’s crude oil production. They control price by controlling production. Even though gas prices in America are hitting record highs, they are far from being the highest in the world. The highest gas price is held by Amsterdam, which stands at $6.48 per gallon of regular gas. Oslo of Norway comes in second with $6.27, and Milan, Italy comes in third with $5.96. These countries have had high gas prices for long periods of time and have adjusted their social lifestyles.However, the US seems to fluctuate more than any other country. In 1950, gas was $1.91 per gallon and gradually lowered until 1980 when it hit a record high of $2.59. Afterwards, gas dropped to around $1.28 in 1995 but is now rising to the current high of $3.26. There are those, however, other than those profiting from the high prices, who are glad about the rise in gas prices. Steven Levitt writes to The New York Times, saying, “For a long time I have felt the price of gasoline in the United States was way too low. Pretty much all economists believe this. The reason we need high gas taxes is that there are all sorts of costs associated with my driving that I don’t pay – someone else pays them. This is what economists call a ‘negative externality.’ Three possible externalities associated with driving are the following: my driving increases congestion for other drivers, I might crash into other cars or pedestrians and my driving contributes to global warming.”To help with the gas price problem, lists the top tens ways to save money on gas: “maintain your tire pressure, use a gas rebate card, observe speed limits, avoid excessive idling, remove excess weight, use your cruise control, use overdrive, compare fuel economy ratings, perform regular maintenance and get a free gas card.”