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Energy

America’s History of Rising Gas Prices – Part 1

Unless you drive an alternative fuel vehicle, you’d have to work very hard to ignore those rising gas prices. Like many American drivers, I am also suffering pain at the pump. In the Phoenix metropolitan area (PMA) where I live, regular unleaded (87-octane) gasoline averaged $3.79 per gallon on March 1, 2012.

Weekly Fuel Snapshot for March 1, 2012:

National Avg.     $3.738

Arizona Avg.      $3.760

Phoenix             $3.794

Tucson              $3.606

Flagstaff            $3.721

Yuma                $3.817

Source: AAA-Arizona (www.aaaaz.com)

There’s also been no shortage of discussions on rising gas prices in the news media and just about everywhere else. However, what is absolutely amazing to me is how this topic is being treated by some as a recent or new problem for the United States.

For those of you who remember gas lines in the 1970s, you may also remember the OPEC Oil Embargo of 1973. Arab oil producing nations imposed an oil embargo on the U.S. for its support of Israel after unexpected attacks from Egypt and Syria. Jay Hake writes in his book, A Declaration of Energy Independence,”The boycott came as a shock to American drivers who had little awareness of their growing dependence on oil from the volatile Persian Gulf and who by early 1974 faced fuel shortages and gasoline lines around the country.”(Reference 1). The reality is that we have been addressing potential fuel shortages and rising gas prices for almost 40 years…..and in some circles, it is being discussed as if it is a new problem!

Why have we not been able to get together as a nation to solve our energy problems? This very question was asked by President Jimmy Carter during a national address to the American people on July 15, 1979.  He went on to say that our true problems are deeper than gasoline shortages and lines…. the fundamental threat to American democracy is a crisis of confidence – the erosion of our confidence in the future. This address by President Carter became known as the “Malaise Speech”. (Reference 2)

Back in the 1970s, American citizens complained about the cost of gasoline at the pump. Will we use that same strategy in the second decade of this century in an attempt to reduce prices? I hope not. It is not a good business strategy, and it doesn’t solve this country’s energy needs.

As of today’s post, the cost of gasoline continues to rise.

References:

  1. Hakes, Jay, Journal of Energy Security, 35 Years After the Arab Embargo, October 2008 Issue, www.ensec.org,
  2. National address by President Jimmy Carter on July 15, 1979, http://www.c-spanvideo.org/program/153917-1
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About Vi Brown

Vi is principal and CEO of Prophecy Consulting Group, LLC, an Arizona firm that provides business and engineering services to private and public clients. Prior to establishing her consulting practice in 2001, Vi worked with Motorola, Maricopa County Government, Pacific Gas & Electric, CH2M Hill, and Procter & Gamble. As an adjunct faculty member, Vi teaches undergraduate calculus classes and graduate level environmental courses. She is also a professional speaker.

Discussion

6 thoughts on “America’s History of Rising Gas Prices – Part 1

  1. Gas at Costco for regular was $4.21 per gal . . . . yikes!

    Like

    Posted by O. Lombard | March 6, 2012, 1:58 am
  2. Hi, Vi. This topic (rising gas prices) has been discussed many times before since the 1970s but rarely comprehensively. There are several factions who only present their sides in the best light.

    Crude oil is a global commodity and so is gasoline. Shockingly, the U.S. exports gasoline. And there are different grades of gasolines for different regions and states of U.S. There are royalties and extortion fees imposed by other governments. Plus there are all sorts of federal, state, and local fees and excise taxes which are either a fixed amount or a proportional amount. The major companies say they break even, if at all, in the U.S. The bulk of their profits come from overseas. That is why they have left local distribution to independent and franchisee gas stations. Yet in Europe, additional taxes are imposed on gasoline to discourage consumers, while in a handful of other places (like Indonesia) there are marketplace subsidies.

    Over a series of discussions, it would be interesting to read about (1) historical prices of easy crude vs. difficult to obtain crude vs. total global demand, (2) the historical “crack spread” between crude and gasoline, (3) the actual cost of converting crude to different petroleum products including gasoline, (4) where every fraction of every dollar of gasoline goes including the governments’ profit, (5) the real costs of additives including ethanol to us consumers, (6) where the oil companies have spent and are spending their capital in order to meet supplies and stay profitable, and (7) would more competitors in that industry appreciably help the situation or worsen it.

    Thanks.
    Andrew Gwie
    andrewgwie.wordpress.com

    Like

    Posted by Andrew Gwie | March 6, 2012, 7:35 am
    • Andrew,
      thank you for your inciteful comments. I do plan on discussing this topic further, and will consider some of your recommendations as I move forward with blog posts on this and other topics. I watched the Senate vote on the Keystone Pipeline Project earlier today. Interesting arguments for and against, and political posturing as well.

      Like

      Posted by Vi Brown | March 8, 2012, 4:27 pm

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