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Gasoline prices have risen to their highest levels in two years. Driven largely by the surge in raw oil prices, there is a stealth component also inflating “prices at the pump”. Together, they are squeezing Americans and bedeviling the economy.
Since this time last year, on average, Americans are now paying $.77 cents more per gallon for gasoline. That’s an increase of 28 percent. Specifically, the average price nationally paid for regular is $3.56 – up from $2.79.
To size the impact on families, a 77-cent increase per gallon regular means - if you drive only 1,000 miles total per month, in a vehicle that gets 15 miles per gallon - you will spend $51 dollars more each month to do so.
In the same scenario, if you must use mid-grade or premium fuel, the relative impact is a bit less, although you now pay $3.69 and $3.82, respectively, compared to $2.96 and $3.06 one year ago.
Wondering about gas price data for your state? Here’s a sampling for your reference. AAA places each of the 50 states into one of five price groups. Interestingly, most of the states in the two groups with the lowest gas prices are in the Southeast. For example:
South Carolina and Tennessee are in the lowest price range of $3.270 - $3.422.
Alabama and Louisiana are in the next lowest price range of $3.437 - $3.497.
Meanwhile, Florida is the only Southeastern state in the middle group which has a gasoline price range of $3.497 - $3.554.
Not surprisingly, northern and western states generally are more expensive.
Connecticut and Vermont are classified in the second highest group by AAA paying $3.557 - $3.607 per gallon.
And, drivers in the most expensive group of states, including Hawaii and Illinois, are paying $3.636 - $4.000 per gallon for regular gas.
Don’t be misled by shallow or misleading media reportage regarding the effects of seasonal increases in driving. Simply put, that has yet to kick in. And, when it does kick in, will be included in AAA calculations - source of the above data.
Here’s another perspective on the impact of the “Gas Price Squeeze” excerpted from data provided by the Oil Price Information Service:
“On a national basis, the average household (spent) roughly $305 on gasoline in December 2010.” That amount - $305 dollars - was “up 13.6% compared to December 2009”. But, that amount was “up a whopping 76% from December 2008”. That is indeed noteworthy given that is just over 2 years ago “when consumers paid about $1.65 gal”.
While gasoline pump price increases are quite real, there is another reality:
They are unacceptable. Why?
Two reasons:
First, the price increases due to raw oil costs were avoidable.
Second, pump prices are inflated by an elemental cost that often goes unnoticed or not discussed:
Taxes!
Regardless of where you live or purchase gas, embedded within the retail pump price you pay at the pump is a federal tax of $0.184 cents per gallon. That has the effect of inflating the cost of each gallon of gas you purchase. Given the average vehicle tank holds 15 to 18 gallons that means the feds drive up your cost to fill-up by around $3. It doesn’t stop there.
Each state has jumped aboard the ‘tax 'em-at-the-gas-pump’ bandwagon.
Here’s the skinny. For consistency, we’ll use the same states noted above and include the federal tax in the tax total displayed.
In South Carolina, embedded gas taxes total $.352 cents per gallon.
In Tennessee: $.398.
In Alabama, gas taxes total $.393.
In Louisiana: $.384.
Florida gas taxes add $.529 to the real cost per gallon.
In Vermont, $.429 slides down the slopes into government coffers.
In Connecticut, $.539 is siphoned out of consumer pockets by state and the feds.
Could it be worse? Well, yes.
In Illinois – President Obama’s home state - confiscates $.574 per gallon.
And, Hawaii – Obama’s birth state - takes more: $.628 per gallon.
But, that has to be coincidence – right?
The bottom line is the retail price at the pump is too high. Next time, we’ll address the raw oil price surge and other cost components.
In the meantime, it’s time to cut both federal and state gas taxes. Imagine the positive effects on family budgets and economy if those double-whammy tax levies were removed? You get the picture.
Unchecked, Americans will likely see per gallon prices above the $4.11 all time high that was set mid-July 2008. That summer 2008 price level deepened the economic dive of the recession. It certainly was a factor in burying Republican John McCain’s presidential ambitions.
It likely have similar effects on Barack Obama’s reelection prospects, especially as citizens conclude Mr. Obama is stealthily blocking needed domestic drilling.
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Richard Olivastro is president of Olivastro Communications and founder of Citizens for Change. A professional member of the National Speakers Association, he is available pro bono for charitable fundraisers and public forums and can be reached via e-mail atRichOlivastro@gmail.com or by phone at 1-877-RichSpeaks.
March 15, 2011 @ 9:59 am
What happened to all that other forms of energy the government promised?
March 15, 2011 @ 11:00 am
The other forms are too costly for the average American. Ethanol is the worst. First off it reduces your mileage, second it is so expensive that the government subsidizes the cost and third it causes food prices to rise by having less corn available for food consumption.
Wind power, the further away from the end user more it cost. You loose power when transmitting energy across lines. The further it is transmitted the more electricity is used.
Solar power, Only works when the sun is up and there are little to no clouds in the sky. it is also very inefficient, it’s better than it was twenty years ago but has a long way to go. The efficiency is from 5% to 15% currently.
IMPEACH OBAMA NOW! ! ! !
March 15, 2011 @ 5:33 pm
the only energy the government developes is hot air and we are not able to use that.
March 15, 2011 @ 10:01 am
The reason gas prices are so high is because of the leeches called Oil Speculators! Commodity Speculation has to be banned (outlawed) by the US & the G 20, or else these greedy speculators will cause global starvation & a global revolution!
And they don’t care- as long as they make billions of dollars more! These Speculators contribute nothing to society- unless you consider misery and high food & gas prices a contribution!
March 15, 2011 @ 10:09 am
Finally! Well said. But following the money you end up at both of the Two Parties headquarters and they will look at you with blank pudgy faces and tell you that you are crazy.
March 15, 2011 @ 10:04 am
Richard Olivastro has made some nice remarks but he left out the Man Behind the Curtain, Energy Speculators in the marketplace. Bill Clinton started this mess and I wonder what Wall Street does for kickbacks for old Bill? Small wonder that he smiles all of the time.
Energy is not something that the public can decide some fine Irish Spring morning, “Oh, would you look at that! Gasoline is too expensive, I’ll just fill up with (?)” This is not like pork-bellies, orange juice, or pots of gold and silver that speculators toy with.
Ending taxes will NOT put an end to this madness as this is a simple minded band aid over a gaping wound. So why all the hubris, all of the platitudes? LOOK FOR THE MONEY! Both political Parties benefit from the trading charades and you will find them doing high fives in the posh bars at Wall Street. The Speculators adore a market that is unstable as they make money with prices going down as well as up.
And finally, adding more oil to supplies is fine but again, that does not help boil the kettle for Speculators. It seems that BOTH Parties are not all that interested in actually boosting dramatically domestic production. All the blarney about Free Trade which is far from from the truth, goes out the door when it comes to this area of energy and fuel prices. Time for the fleeced Public to catch that slippery Leprechaun! Humm, a really short Bill Clinton would look like a Leprechaun. Disturbing.
March 15, 2011 @ 10:50 am
Just 15 years ago oil future trades consisted of only 15% Speculators! Today that number is 90%! Commodity Speculation needs banned! Period! The only people that should be allowed to trade commodities are people in the production, processing, storage or transportation of that commodity! PERIOD! It can be done. Get the G 20 to also do this. AND refuse to trade with any county that allows Commodity Speculation!
Neither party gives a damn about the working people in the US or the millions of us retired seniors trying to exist on a small Social Security income! Nor does the so-called Tea Party! I emailed the Tea Party people and asked them if they would support an Insurance Consumer Protection Bill and a Bank Consumer Protection Bill that would help the working people and the seniors! NO WAY JOSE!
March 22, 2011 @ 10:51 pm
Future trading has a lot of benefits. Explanation is too long to delve into here.
Here is what can be done now but is not. Get the Commodities Exchange to raise the margin rates for future contracts to say 40 -50% when prices become speculative. When large up front capital money is required, speculation is tempered and brings back tradin to normal in a jiffy. This was done in the 60′s up to the 80′s when there was a crisis as we do now, but has not been done in the last 20 years whenever we had a market crisis’.
March 23, 2011 @ 11:30 am
Makesense, as consumers are helpless in a market that is NOT competitive, not flexible, ie. they cannot could forgo the sudden rise in gasoline price and buy something else, then indeed, Future Trading of the energy markets, that are unlike porkbellies and orange juice is very beneficial to THE PLAYERS in the market place.
Wild swings of price, is, ah, priceless to the Speculators but not the shackled consumers. I recall playing the market making money with stocks going up and stocks going down. Weee!
Dad here in Houston was a VP in a certain company. Near the end of his life in the natural gas and oil industry he was amazed at the sudden wide swings of price of which he did not find appealing in an industry that has long lead ups to putting production on line. This also put employees at risk that suffered as Speculators do NOTHING but play the market, greatly to their own benefit and not the industry or consumer. Not a care in the world when you whistle going to the bank.
But if as you say, raising margin rates… is the answer that is fine but I will attest that to follow the money trail, it will lead you to places/persons that want privacy and with a free pampered passage to play the market as they wish.
March 15, 2011 @ 12:55 pm
Questions:
1 – HOUSE HOLD FUEL OIL (#2) USED TO BE 50% OF THE COST OF GAS AT THE PUMP,
IT NOW COSTS 110% TO 120% – Why????
2 – WHY DON’T THEY DRILL IN THE “BAKKEN RESERVE”???
March 15, 2011 @ 3:34 pm
People that do not live in cities or close to one have to have cars, no other transportation. I travel 58 miles one way for my doctor.I know the gov. needs some tax on the gas at the pumps, but not this much. they need the taxes beause they give money to each state for roads. OK. and states need sme taxes to keep up the highways, then there is the county tax. That is a laugh in the country. They have men on them that either don’t know what they are doing, or don’t care. The culverts on our roads are all covered up on the ends on one side of the road, I really think the drivers that did that should have to take a shovel and empty them, so our drive ways don’t get washed out and big rocks washed in the middle of the drive. But no a road that use to be down to a senior dock which was removed 10 years ago and no one but the county head of the transportation uses it and two other men to take gulf cart down it to fish. no one lies on that road, and it has been graded several times last year real nice road and ditches on bothsides. While the main road is in very bad condition and no ditches on the otherside. The man that use to do the road was good so they pulled him and gave this man the job. must be a friend. Anyway price of gas going so high is greed. the big coops. are getting big profits. I am against drilling in the water, to many things happen to distroy our water and fish. I am agains strip coal mining as they cut down trees we need for air and polute water in creeks and rivers with chemicals. They haven’t been able to move forwards with going green and experments for new fuel because of the money that goes into our elective partys pockets so everything tried have been block by the party of NO and you know who that is as they named themselfs. I am a moderate not a liberal,use to be republican but no more.
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