Why are gasoline prices such a mystery to Americans?

I was talking with my girlfriend's parents this weekend. They asked me quite honestly, why gas prices have gone up so much? "Are we running out of oil?" they asked. I told them that as long as there are enough people in China and India who are willing to pay four or more dollars a gallon for gasoline, the world price would rise to that level, and no reasonable supply increase will make a material dent in the price. They looked at me with strange, puzzled looks. "Ok, let me put this another way: When you go to Target or Mervins and buy cheap clothes and shoes made in China and India, you're supporting a business in those far away places, and taking a job away from someone in the USA. We've all been doing this for SO MANY YEARS now that the economies in these distant places have matured, and now those people have as much, or more buying power than we do. We did it to ourselves!" Mercedes Benz in Germany announced they have more luxury car buyers in China than the US! No joke!

Because you yourself are such a shining beacon of wisdom and knowledge that the rest of the world just can't keep up.

Really. I agree, most Americans are in denial. I actually know someone that said we should print more money (and they work for a bank!)...um, that would make gas MORE expensive, cause our dollar value is already in decline. And we haven't been pumping much domestic oil!!
About luxury cars in China...98% of the top 2% of weathiest Americans drive used cars, so having new things doesn't impress me. I have excellent credit, my own house and money in the bank because I don't blow money like my neighbors do.
BTW, I shop at the Salvation Army not because I'm poor, but so my money goes back into my community and NOT to a sweatshop in Bangledesh or somewhere. Honestly, I don't think anyone notices---a black skirt is a black skirt, no matter where you buy it.

Yeah, it's very interesting to hear people talk about gas prices in the U.S.. Even a diff. of a couple cents will raise discussion.

In other countries, gas prices have been much more expensive than in the U.S. for years past.. Americans really have no right to complain if they want to drive around in Escalades and Hummers

That's right. I try to find clothes made in the U.S.A. and I can't find any.I feel betrayed when i pay up the ying yang for clothes made in China.

True. But in some places the price of gas is $8 or higher thanks to taxs because countries are trying to get people to use more energy efficient cars and less often. I think the US should do this b/c the money is only going to help our schools and what not and we wont all die thanks to global warming.

Actually the price of oil is going up in the US higher than the rest of the world. FX rates have a lot to do with this.

Here is a well written article that explains it.

http://www.mees.com/postedarticles/oped/a47n33d01.htm

we went to iraq to take over their oil use it all up war inflation..we have plenty of oil available...just a way to make the right peopple rich (government) and the poor people poorer (society)

It's admirable that you're interested in economics and how one country's economy affects another country. I'd like to suggest some other ideas about economics that might interest you.

Concerning gas prices: you might be surprised to know how much in the way of taxation is included in the price of gas. This type of taxation is called Value-Added Tax (VAT), which is a hidden tax that is not revealed to the customer. You can drive from one county to another and pay lots less in one county and lots more in the other.

I don't exactly know what you mean by "we have done it to ourselves." The price of gas in Europe, for instance, is much higher than it is in the US. Their high cost of gas does not cause our cost of gas to go up. Often you will find that much of their cost of gas is made up of hidden taxes.

The US has a vibrant economy, even when it slows down. Our economy is certainly more robust than Europe's. You mention Germany. I visited there and learned that they're having a terrible time with their economy, ever since East Germany merged with West Germany. The West Germans (who have been living in a free-market economy for decades) were seeing higher and higher taxes on them, to compensate for the stagnant economy of East Germany (which had been living in a Soviet-Union non-free economy).

As to China's economy, do you think you would be better off living in China? Do they offer the freedoms you expect from a free-market economy? Freedom of speech, for instance?

If Mercedes Benz is selling more "luxury cars" in China than it is in the US, I would like to have them define a "luxury car." When I was in Germany, I saw all different-priced cars, as well as trucks, that were made by Mercedes-Benz. It's also possible that "luxury cars" selling best in the US are made by other manufacturers who do a better job of designing and pricing their cars for the US market.

As for jobs overseas, many times US companies outsource to countries with lagging economies. The US companies gain in that workers in these countries will work for less (since the salary is high to them) and the US companies can pass along their savings by charging a lower price for their products. The customer gains from these lower prices.

Those in other countries with slow economies gain, because the salaries that US companies will pay are higher than the salaries that companies in their own countries will pay.

I haven't heard the expression "global economy" in a while. But the term well describes how companies handle various areas of their business. We aren't giving away jobs. We are simply offering citizens of other countries a chance to participate in the US economy. People in the US are living and working in the global economy. People in other countries are also living and working in the global economy. It benefits us all for people all over the world to earn more and increase their standards of living.

Quite often people make the mistake of comparing today's prices with those of the past. However, one has to take into consideration the effects of inflation. Over time, money loses value. What cost a nickel in 1950 may now cost ten or twenty dollars. However, balancing out the loss in purchasing power of the dollar, salaries have risen. A job that paid $3,000/yr. in 1970 may now pay $12,000 to $25,000/yr. or more today (estimates as salaries vary from location to location).

All of these factors need to be taken into account when considering the US economy, as well as the economies of other countries.

I think that you might want to consider these issues on your own. It may be that your ideas have been shaped by the ideas of your parents, your schoolmates, your teachers or one-sided media outlets. It's always a good idea to consider many views of how an economy works. I would recommend to you the writings of Thomas Sowell (pronounced Soo-el), an economist, author and fellow at the Stanford Hoover Institute, who writes about economics in plain simple terms. He has a syndicated column and so should be easy to find online. Another easy-to-follow economist is Walter Williams, who is a professor of economics at George Mason University. He also has a syndicated column that you should be able to access online. (It's purely a coincidence that both of these economists happen to be African-Americans.)

Just some ideas to consider.

So, from a single conversation with your girlfriend's parents, you concluded that gasoline prices are a mystery to all Americans? Every single American? Based upon this sampling of two?

cuz the president keeps the war and
we get gas from iraq
and
the ppl there r mad
so he went over 2 iraq
cuz we didnt get alot of gas
sooo he made the prices go up cuz we just had
2 have more gas
(idky)
they keep raising the prices in iraq that means they have 2 raise the prices
here so they can make the profits
i think its all the presidents fault
cuz of the war
i think that republicans(idk how 2 spell)
cshould think about how the war is making
the usa worse
ps. most of this was in a sarcastic voice

its not a mystery. people just like to complain a lot. the thing is the dollar has a new value. like in the old days 5 dollars was A LOT of money to them. now its different. oil is in high demand. and it takes a lot to pump it out. but remember their are other things we can use if we do run out. remember the electric car?

It all around war and profit, you have much to learn about if you don't know this.

'scuse me.....Im gonna return to the tv and watch something with some substance after that......like, Leave it to Beaver!

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