Gas prices are high for a few reasons. I spent 4 months learning about this stuff and i can finally put it to use, so hang on
1) the price of Oil. For companies, the price of oil is the biggest variable and cost. Most of the rest of the costs (ie: work force, deprecation, infrastructure) are fixed, Oil is not. As the world market pushes the price higher, companies need to charge more at the pumps to ensure the increased cost is revenue neutral
2) GST. GST is the only governement tax that varries with the cost of the fuel. The rest of the taxes (excise taxes if i recall correctly) are charged at a fixed, per liter basis. So as the price of oil causes companies to charge more, the GST you pay also climbs and the price os gas become more expensive. I don't really want to comment one way or another on how i feel about this role of the GST, but i'll pass along this, the revenue from the GST and federal excise tax are being returned to cities now to help with infrastructure and improve tranist.
Those two are the major problems and causes of why pump prices are pretty high. Another problem is demand for fuel and gas in North America and around the world (China and India are driving it big time) is that there is a set # of refineries and you can't just set one up over night. It takes about 8-10yrs for one to come online and, as most refineries the world over are currently operating at max capacity there is a limited supply of refined petroleum products.
With high demand and a limited supply, price climbs. This is yet another reason prices are high and a contributer to the high price of oil in the world.
That answer some questions?
