NewsHour Extra: Gas Prices

Traveling by car these days will cost you more this summer-- at least $1.70 a gallon for gas. That's the average price at the pump this month, up 13 percent from just a year ago.

An estimated 30 million drivers will hit the road for Memorial Day weekend. If each one buys just a gallon of gas, they'll have spent about 51 million bucks.

Who sets the price?

If you think gas prices are high in the U.S., take a look at Europe. There, gas is typically four times as expensive. The going price in Britain is over $4 a gallon.

The price of gas in America is a complicated balance between supply and demand. Over half of the oil that becomes American gasoline comes from other countries in the Middle East, or South America. Oil is also pumped from sites in Texas and Alaska.

Oil companies buy the "raw oil," called crude oil and then remove impurities to make it usable in cars-- a process called refining.

Supply has been pretty constant, but a combination of increased demand and issues with the refining process has raised the price.

The role of government

Americans are used to a plentiful supply of cheap fuel. And when gas prices start to rise, many of the nation's drivers look to government to help fix the problem.

The president and his energy team responded with a call for more refineries and pipelines and greater exploration for oil in the U.S. The plan is now before Congress.

President Bush "I worry about the fact that hard working people are paying high prices at the pump; it concerns me a lot," the president said recently. "I also say we need to build more refining capacity. We need more supply."

Clinton Last summer, when the price spike began, President Clinton tapped into the country's strategic oil reserves -- a 570 million gallon reserve that had been set aside for emergencies.

Bush the elder In the early 90s, President Bush (the elder) went to war with Iraq in part because of oil. When Saddam Hussein invaded the tiny middle eastern country of Kuwait, the political and economic stability of the entire region -- the source of most of the world's oil -- was threatened.

Carter More than a decade earlier, President Carter's presidency was harmed by gas shortages. In 1973, the group of Middle Eastern oil producers called OPEC raised its prices 130 percent and refused to sell to the U.S. as punishment for supporting Israel in a war in the Middle East.

Americans had to stand in line for hours, just to fill the tank.

Lifestyle or environment

A pipeline President Bush's plan to increase drilling and refining worries many environmentalists. Building thousands of miles of pipelines could damage wilderness areas. Oil refineries release pollution that can cause global warming and increase illnesses like asthma.

When Bill Clinton was president, he issued new regulations designed to protect the environment. These rules set limits for where people could drill for oil and gas and build power plants and pipelines.

Oil Rig President Bush says the Clinton regulations are slowing down oil production and ought to be changed.

Environmentalists (who point out the president and the vice president are both former oil company executives) say the answer isn't looser regulations, but a change in the American lifestyle.

Living large and guzzling gas

Currently, the United States consumes 19.6 million barrels of oil per day,which is more than 25 percent of the world's total.

Giant gas-guzzling SUVs have pushed the nation's fuel consumption to an all time high in recent years. And these vehicles don't travel very far on a gallon compared to smaller cars.

And in a country of cheap gas, car manufacturers don't have any reason to build cars with better gas mileage. This means we're using up more oil and getting fewer miles out of it.

Supply and demand

But Mr. Bush's report focused on the oil that is extracted and refined in the U.S. He pointed out that a new refinery has not been built here in 25 years. American refineries are running at the highest rate possible, just to meet the increased demand.

Bush also blames the Clean Air Act, a law which requires different blends of fuel -- so called "boutique blends" -- in different parts of the country. These contain additives adjusted to help each area combat air pollution. Making these special blends, the president says, takes too much time and money and slows down production.

Who's driving who?

When demand is high, and supply is low, someone is making big money. Oil companies are reporting record profits.

President Bush has rejected calls to end the federal tax of 18 cents on every gallon of gas.

A Hybrid Car The president, however, wants to give tax credits to people who purchase fuel-efficient cars, or cars that combine electric and gas to use less fuel.

But there are still questions about what is the best overall energy policy for the U.S. Some people would like to see greater exploration in the U.S. to make the U.S. less dependent on imports.

There are other who say conservation is the answer and Americans need to use less gas.

As Americans drive through summer into fall, the energy solution is still up for debate.

What do you think? Are people entitled to as much fuel as they want? Or should they try to "go easy" on the planet, and use less?

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