2/28/2005

$2.50 a Gallon?

The demand for gasoline is ever-growing but supply capacity is peaked. In the article, Analysts: Crude Could Hit $60 a Barrel, it states that we should be expecting $2.50 a gallon somewhere in spring. After spring, I believe gas prices will get even higher. I do not see the demand for gas diminishing any time soon. This made me think of substitute goods, as the price for gas increases, the benefit of a substitute increases. I believe the trend for hydrogen and alcohol fueled cars will rise. There are a few motor companies that are investing in these substitute goods; I feel these companies will be a good investment in the long run.

4 comments:

kenny said...

Most people don’t think about the amount of tax that is included in the price of gasoline. If there were a substitute for gas the government would have to tax it to maintain America’s elaborate systems of roads. If Americans think they are paying too much for gasoline maybe they should not expect such elaborate systems of roads to be maintained by taxes added to the price of gasoline.

C-Dizzle said...

I definitely feel that exploring other fuel sources for vehicles is a good thing. Many people, especially those who are environmentally conscious will buy onto alternate fuel sources when it means a cleaner environment.

However, you can guarantee that if and when new fuel sources for cars are developed, the government will find some creative way to tax it to death. Fuel taxes are a major source of income for the government and it won’t be undersold.

Diane said...

Kenny makes a very good point. I hadn't thought about the tax that would be added to the price of alternatives. But then again I'm not complaining. I don't think gas prices have kept pace with inflation.
The hyperlinked article mentioned that differing regional specifications contributed to the rising prices. I don't know what these specifications are but nationalising them might decrease prices.
Stricter controls on sulfur emissions at refineries also contribute to the price. Many would argue that these environmental controls are a good thing.
Gas prices will continue to rise as the cost of oil detection, extraction, and refinery rises. Alternatives should only be used if all the involved costs are less than those of gasoline.

Dr. Tufte said...

I think Ralph hit is just right here.

Demand for gas is growing. That's a reflection of good things, right? More travel, more transportation, more goods being made with the energy, right?

So the higher prices are a reflection of us doing the things we value in life. Seems to me that's the same reason that pizza isn't free.