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A backgrounder on
the rising cost of oil

Oil prices rise across the world, as OPEC decreases exports

Cheap oil for the holidays

The world's dependence on
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O.P.E.C

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Pumped Up
(March 24, 2000)

Have you noticed how much you're paying at the pump these days?

No, its not your local gas station trying to cheat you out of a few extra bucks. Gas prices across America are soaring.

Last year, gas was at a record low. Most Americans could fill their tanks on 99cents a gallon. But today, gas prices are as high as $1.80 per gallon, fueling debate on how to fix the problem.

A Long Cold Winter

This winter has been cold in the Northeast . People who use oil to heat their homes were faced with huge heating bills. Gas stations were forced to raise their prices weekly.

Even though the price increase is less than a local 35 cent phone call, it adds up when you fill up a 14, 16, or 18 gallon tank. That's why American truckers are fuming mad, their 18 wheeler trucks can carry a whopping 50 to 100 gallons of fuel, costing over a hundred dollars per-tank more than last year.

Truckers have twice driven to Washington to protest the rising cost of driving. They want the government to step in and fix the problem. Some are even refusing to deliver their cargo until something is done. Seventy percent of the cities in the U.S. rely on truckers to bring the food and goods they need every day.

Seeking a solution

One way to lower prices quickly is to release some of the 600 millions of barrels of oil that the government is keeping for emergencies in Texas and Louisiana. The oil could be sold to gas stations and refilled later when prices return to normal.

But government officials point out that this is not a real emergency- like a war or natural disaster- when we desperately need fuel.

Moreover, the oil in the reserves is crude oil-- oil in its natural state. The oil we use in cars, trucks and homes is refined . The refining process can take months before its usable gasoline, and many are hoping that the crisis will end before then.

Another short-term option would be to temporarily suspend the tax on gas. Taxes add around 40 cents to every gallon we buy. But many politicians are backing away from that idea, because the tax helps pay for keeping roads and highways safe.

For now, the government thinks the most important thing to do is convince the members of OPEC to sell more oil. Most of our gas comes from a group of nations in the Middle East, Africa and South America. Together they form a group called Organization of the Petroleum Exporting Countries or OPEC.

This solution would mean the U.S. would not have to dip into its emergency reserve or miss out on lost taxes. Energy Secretary Bill Richardson says that he is confident OPEC will decide to do that when they meet on March 27th.

O.P.E.C

Led by Saudi Arabia and Kuwait, the OPEC countries have natural deposits of crude oil that they refine into gasoline and sell to the rest of the world.

Created in 1960, OPEC meets twice a year to decide how many barrels of they oil that they will produce and what price they will sell each barrel at.

This isn’t the first time the United States has faced an oil crisis. In 1973, OPEC raised its prices 130 percent and refused to sell to America all together. It was punishing the U.S. for supporting Israel in a war in the Middle East.

Again, in 1977, the oil producing nations decreased production so much that Americans had to wait on long lines at the gas station just to make sure they could buy enough fuel to get to work.

Renewable Energy

Each time we face these oil “crunches” we are reminded of the need to use less gasoline and explore other ways of making our cars go.

In Europe many nations have imposed heavy taxes on gasoline so that auto-makers must sell small, efficient cars. They may not look as menacing as American Sport Utility Vehicles, but they can run on half as much gas.

Companies from around the world are studying ways to power cars with renewable energy resources. Oil is nonrenewable because there is a limited amount buried in the Earth’s crust.

Solar cells can convert the Sun’s rays into electricity. Certain kinds of alcohol can be used to run engines, and some scientists even believe that household trash could one day be used to power your family’s car.

For now, the most practical new cars combine old fashioned gas with battery power. While your car might drive 20 miles on a gallon of gas, “Gas-Electric Hybrids” can travel 80! A few of these vehicals are already being sold in Europe and the United States.

No one knows for sure what the long-term solution to oil shortages is. What we do know is that driving is getting more expensive than ever, and the best answer for now might just be to ride a bike.

Tell us what you think? Should the president release the oil in reserves? Should Amreicans pay more for gas, because we drive large gas burning cars? Should O.P.E.C lower its oil prices and release more oil?

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