Why gas is so expensive

It’s not runaway greed or overregulation. It’s the world we live in. It’s a price that can be seen in a single gallon of California gas.

I can’t decide whether to frame or burn the receipt from a Chevron filling station in Berkeley, Calif., that documents how much I spent to fill the tank of my 12-year-old Nissan Quest minivan on Sunday morning. At $4.09 a gallon for regular unleaded, the total came to $65.68. That’s the most I’ve ever paid for a tank of gas, so I feel inclined to treat the paper record with respect. But a couple of weeks from now, if recent trends hold true, my unwanted milestone will be eclipsed again, and the receipt transformed into a trigger for nostalgia. Four-dollar-a-gallon gasoline? Ah, those were the days.

On Tuesday gas prices hit record highs in the United States for the 21st day in a row. Many Americans are understandably upset and angry. Partisans on both sides of the political aisle believe they know why this is happening. The left blames greedy, customer-gouging oil companies; the right pillories environmentalists for blocking the construction of new refineries, preventing offshore oil development and opposing drilling in the Arctic National Wildlife Refuge.

But there’s much more going on here than good old greed or restrictive environmental regulations. Explaining the high price of gasoline at my local pump requires taking into account surging demand for oil in China and India, the falling value of the dollar, the impact of commodity price speculation by energy traders and a whole constellation of factors exerting steady downward pressure on supply. Those include the Iraq war, political instability in Nigeria and anti-American intransigence in Venezuela and Iran. There’s also the ever-popular peak oil thesis: As the production of existing oil fields in Russia, Mexico, the North Sea and possibly Saudi Arabia inexorably declines, discovery and exploitation of new sources of oil are becoming steadily harder and more expensive.

Even the people who have spent their entire lives studying the price of oil don’t know for sure how to weigh each factor for responsibility in the total equation. Perhaps the safest thing to say is that it’s all in there, in my $65 receipt. Kidnappings of oil executives in Nigeria and the nationalization of Exxon-operated facilities in Venezuela. Chinese economic growth and hedge fund manipulation. ANWR and air quality. The price of gas in the United States is a consequence of global economic growth, rising standards of living, greed, politics and the stresses induced by 6.5 billion people going about their business on a planet with limited resources.

Sound complicated? It most certainly is, which is one reason why we should avoid the temptation to simply blame greedy oil companies or radical environmentalists. But it’s also strangely simple — the world, and its manifold dilemmas, can be seen in a single gallon of California gas. Let’s take a closer look.

Salon