Hurricane Isaac recently passed through the Gulf of Mexico, causing a number of oil rigs and refineries in the area to temporarily halt production. As a result, gas prices have risen approximately $0.11 per gallon in the last week alone, or between 2.5% and 3.0%. As we now know, Hurricane Isaac was not as devastating as Hurricane Katrina in 2005, but it still resulted in an increase in fuel prices.
A number of factors influence fuel prices in the United States, and gas prices vary greatly by state. However, gas prices also vary significantly by country. Venezeulan gas prices are subsidized by the government, while Norwegian gas is highly taxed, such that the cost to fill up a Chevy Suburban would be $4 in Venezuela, and about $400 in Norway. Even a country like China has significantly more expensive gasoline–around $4.90 per gallon–compared to the United States where gas is around $3.75 per gallon.
As gas prices have risen in the last few years in the U.S., many have sought to blame President Obama for the rise in gas prices. While the U.S. is the largest consumer of gas in the world, it may be the case that the President’s defenders have it correct that he doesn’t have much ability to control fuel prices.
Questions you might consider answering (Remember, you don’t have to answer all of these, and you can make up your own question.)
- What do you believe will happen to fuel prices in the coming years? What happens when cars become more efficient? What happens to fuel consumption and car efficiency as gas prices rise?
- Why do countries other than the U.S. have such high gas prices? Do countries like Norway simply want to avoid having cars on the road, or do they believe consumers should be consuming less gasoline? Or is it something else entirely?
- What do you believe the President has to do with gas prices? Presidential candidate Mitt Romney has made some recent proposals to lower gas prices. Do you believe that his proposals would help lower gas prices if he were elected? What do you make of the goal of ‘energy independence’ of the United States?
- What would be the tradeoff of enacting policies proposed by President Obama and Presidential candidate Mitt Romney. I haven’t laid these tradeoffs out above, but there should be plenty of reading available for their plans.
- As China continues to grow, how much more fuel are they predicted to consume. Look for an answer that takes account of their increased efforts at fuel efficiency? What would happen in the U.S. if the President’s fuel efficiency goals are met? What are Presidential candidate Romney’s plans for fuel efficiency standards in the U.S. and how would that impact our projected use of fuel?
Note: If you don’t know what a term means, look it up in the book or online.