Gas Price Protest: More Gas at Lower Prices

Frequently Asked Questions

Why are gas prices so high?

You've probably heard this before, but a big part of the answer comes down to basic supply and demand. World oil production has risen steadily – from in the two decades before 2006, it increased more than 30%! – but rapidly increasing demand from emerging economies like China and India has meant that there are more people willing to pay more for oil. That drives pump prices up here in the U.S.

There's also competition from other products that use oil. A little less than half the oil from every barrel produced goes to automobiles. The rest goes toward other uses, like airlines and household heating.

Another big thing that adds to the price of a gallon of gas is taxes. The federal gas tax is about $0.18 per gallon. Every state also adds taxes of its own. Those taxes vary, but, not surprisingly, at $0.41 and $0.45 per gallon, respectively, New York and California's taxes are the highest in the nation. State gas taxes, in fact, are the primary reason why different regions of the country have drastically different gas prices.

GAs Pump

What can be done to lower pump prices?

With demand rising, the most important thing to do in the long term is increase supply. And the best way to do that is through greater oil exploration. The problem, though, is that there are significant restrictions to doing so. A lot of attention has been paid to the controversy over the development of ANWR in Alaska. There are environmentally friendly ways to get access to that oil that should be looked at, but that's only one piece of the puzzle.

Right now, 75% of the best locations for onshore oil production, as well as 85% of the coastal waters in the continental U.S., are either off limits or heavily restricted. There's plenty of interest in developing our domestic oil supply, but these restrictions make it pretty tough.

But that's long term. I'm feeling pain at the pump right now!

In the short term, Congress could suspend the federal gas tax, which currently accounts for about $0.18 per gallon of the price you pay at the pump. There are several proposals to do this, but the one we support is the Gas Tax Relief and Earmark Moratorium Act of 2008, written by Rep. Paul Ryan and sponsored by Rep. Roy Blunt and John Boehner.

Okay, that's what Congress can do to lower pump prices. But what can I do?

You've got a voice. Let it be heard! Sign the GasPriceProtest petition, and leave a comment. Call your legislators. Let them know you're tired of paying so much for gas, and that you support the Gas Tax Relief and Earmark Moratorium Act of 2008 – the quickest and best way to achieve lower gas prices.

That sounds good so far. But isn't that bill pretty much the same thing being offered by Hillary Clinton?

No! Sen. Clinton's plan to suspend the gas tax doesn't pay for it with real spending cuts. Basically, what she wants to do is borrow from the future. It's not savings; it's a loan to be paid back in the future – with interest! Rep. Ryan's bill pays for the tax break by cutting out $14 billion in earmarks – the wasteful, pork-barrel spending you've been hearing so much about.

A lot of politicians talk about taxing the oil companies. Those big corporations make hefty profits off of oil sales. Shouldn't they be required to pay more?

Only if you want to pay more too. Think about it: So-called "windfall profits" taxes only make gas more expensive to produce – and those prices get passed on to consumers. It doesn't matter whether you tax the oil companies or whether you tax the purchase of gas at the pump – a tax is a tax, and it's going to drive up prices either way.

But what about price gouging? Isn't that part of what's driving up prices?

There are plenty of politicians who would love for you to believe this, but it's simply not true. A study by the FTC wasn't able to dig up a single instance of price gouging by a U.S. wholesaler or retailer between 2002 and 2006. And while the oil industry is certainly large and successful, its profits per dollar are no more – and often less – than, say, the banking or pharmaceutical industries.

Are gasoline prices destined to rise forever?

Forecasting energy prices is always tricky, but it's far from a sure thing that pump prices will continue to rise. Indeed, just a few months ago, some of the biggest players in the oil markets – people who have big bucks on the line -- were projecting a mild decline in prices over the next eight years. Of course, if Congress gives us higher taxes and more restrictions on supply, prices probably will rise, which is why it's so important to sign the GasPriceProtest petition and voice your support for lower gas prices right away.

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