Gas prices are climbing and most Americans are feeling the pain at the pump, but in reality oil should not cost this much money. Recently, oil has been violating the law of supply and demand. Gas prices are high because of derivative trading and the value of a weak dollar. The Federal Reserve has worked to devalue the dollar because a weak dollar pushes the price of United States exports down, so it can sell goods to foreign markets at cheaper prices.
One drawback to having a weak dollar is it makes importing goods into the U.S. more expensive. The oil the U.S. consumes comes from foreign companies such as the Organization of the Petroleum Exporting Countries and foreign countries such as Canada — this causes oil to be imported at higher prices. Speculation and derivative trading are also causing gas prices to be unnecessarily high.
Derivatives in the market allow for investors to speculate (bet) or hedge (insurance) on certain stocks or commodities. Investors are betting that oil demand will increase because of the turmoil in the Middle East — especially with the war in Libya, which is the ninth largest world oil supplier — although actual demand has remained relatively stable.
Although some people suggest a new tax on emissions, that would be unrealistic, especially with the American economy still struggling. People have to get to work, and unfortunately more often than not in this country — even in the cities — public transportation is poor.
It is faster and easier to drive to work than it is to take a bus, not to mention Americans work longer hours than any of its European counterparts. After a 10-12 hour day, I think most people want to go straight home and see their families. I would not want to spend an hour riding the bus because the U.S. needs to invest in green energy. In summer 2008, when gas prices shot up, most Americans bit the bullet and paid up — they did not drastically alter their driving patterns or fuel consumption.
A new tax would only take money from the people suffering the most. An emissions tax seems like a good idea to turn the U.S. toward green energy use because filling up on gas would not hurt ordinary Americans’ budgets.