Miami Student

Issue date: 4/29/08 Section: Community

Rising gas prices may have many students rethinking their summer plans and asking 'why' as they watch the prices on gas meters tick higher and higher.

According to www.ohiogasprices.com, a consumer Web site created to help Ohio residents find the cheapest gas, the statewide average gas price Monday was $3.549 a gallon for regular, unleaded gas.

A month ago, it was a little over 3 cents less. This time last year, the Web site reports an average cost of $2.947 per gallon.

Miami University students have noticed. Sophomore Katie Sopko recently traveled to Gatlinburg, Tenn. for her boyfriend's fraternity formal.

Sopko said the five-and-a-half hour drive took more than six hours with traffic, causing the group to stop twice for gas each way.

Sopko stomached the $45 cost of filling the tank of her Ford Escape almost entirely on her own.

"It makes me feel angry." Sopko said. "It makes me not want to go places. Since I'm the one driving I feel like I have to pay and when people offer, they never pay enough."

Sopko said that at move-out last year, it took $35 to fill her tank.

Miami economics professor James Brock said the price increases are due to supply and demand issues, both domestically and internationally.

Brock said that domestically, the United States government allowed the largest oil companies to merge together thus creating an oligopoly of the American market, resulting in price hikes.

An oligopoly exists when there are few firms in a market, each with significant market power and the ability to control prices because of little competition and high barriers of entry into the market.

Internationally, according to Brock, the supply of oil from Organization of Petroleum Exporting Countries (OPEC) has controlled and exploited petroleum prices per barrel to the United States.

"There's a tremendous amount of wealth being transferred to those countries," Brock said.

On the demand side, Brock said, the growth of India's and China's economies has amplified energy demands, including oil. Brock said that as these developing economies boom, more and more people want to own cars, resulting in an increased demand for gas.

Brock said that as a result of the American stock market's downturn and a speculated recession, investors are beginning to turn to investing in oil contracts, buying and selling quickly to make a profit.

"How high it goes, well, that's anyone's guess," Brock said. "It would have been hard to believe that we'd now be approaching $4 a gallon."

Jason Toews, a spokesperson for Ohiogasprices.com's supporting company, Gas Buddy, said prices will continue to increase during the summer months because of a state's varying summer requirements for gasoline additives, which makes it more costly to refine oil into the summer gasoline.

Brock said the government is in a tough position and can't, at this point, do anything that would be economically beneficial.

"(The U.S. government) can't just say, 'We don't want the price to go any higher,'" Brock said. "It would make things worse by setting a limit … gas prices would just go higher everywhere else in the world."

Toews said that the high prices aren't making people drive less but instead, are impacting how people spend their leisure time.

Toews suggests college students carpool and shop around for gas to help save money on fuel costs.

Page 1 of 1

Article Tools