With gasoline topping $4 a gallon nationally, there’s a lot of speculation as to what actually causes gas prices to soar. Unknowingly, many folks point fingers at speculators and futures markets, claiming these financial speculators, along with big oil companies, take home all the profits. But George Mason economist Walter Williams does an excellent job explaining why we shouldn’t condemn speculation, but rather “recognize the vital function it serves.”
So, what’s the story behind high gas prices? The Institute for Energy Research took this question to the gas pump and asked consumers their opinions.
Undoubtedly, skyrocketing demand plays a large role in rising oil prices; rapidly developing countries such as India and China demanding more oil as growth surges ahead. And with massive reserves left untapped in the United States, a constricted supply limits the ability to meet rising demand. As The Heritage Foundation’s Ben Lieberman writes, America should focus on expanding supply domestically while reducing unnecessary, burdensome regulations and taxes.