Why Car Prices are Increasing
High gas prices have caused the market for gas-guzzling SUVs and trucks to sour while used compact and hybrid cars cost more than ever. Market forces have caused a stunning escalation in the cost of economical transportation as Americans look to counter the toll they pay at the gas pump.The Law of Supply and Demand in the Oil MarketOne of the most basic rules of economics, the law of supply and demand, has wreaked havoc on auto owners. Because of a short supply of oil controlled by Arab nations and oil speculators, the cost of oil-related products has gone through the roof. The United States has enough oil under its territory to make the nation energy independent for longer than a century, but government restrictions imposed by the Obama regime have throttled the domestic oil supply.Were the government to announce an unfettered and unprecedented campaign to flood the market with unlimited supplies of U.S. crude oil, the news would likely drive oil prices down immediately. Unfortunately, the government is too busy wasting billions of dollars on failed alternative-energy initiatives such as solar, wind and algae to do anything to reduce the price of gasoline within its borders.Meanwhile, in Washington, the ominous war drums beat a familiar sound as politicians continue building the case for military actions in Syria and Iran. The almost insane insistence on more American interventions overseas has fueled market speculators who believe that war with Iran will impact the global supply of oil and send oil and gas prices even higher.The Law of Supply and Demand in the Auto MarketHigh gasoline prices do not affect the ultra wealthy elitist politicians that rule the United States. People with millions or billions of dollars in the bank do not care how much they have to pay to fill their gas tank. In fact, most politicians probably remain ignorant of the price of gas because they send hired servants to fuel up their cars. Maybe if politicians came from the American working classes, things would change.As the White House continues to deny the role of oil supply on oil prices and as Congress takes even more vacations; working, unemployed and poor Americans must find ways to ease the crushing blow of high energy prices. Many people have already trimmed their travel to bare necessities, yet they still cannot afford the fuel they need to get to work, school and the grocery store. In desperation, Americans have turned to the used car market.American drivers increasingly turn to the used car market because they cannot afford the high sticker prices on new fuel-efficient vehicles. The increased demand for a small supply of used compact and hybrid vehicles has sent prices soaring, making affordable transportation impossible for many drivers.According to theLos Angeles Times, the prices of fuel-efficient cars will rise by an additional 20 percent in coming weeks. In many cases, the prices of used cars now approach the prices of new cars, causing demand to spill over into the new car market.A Rock and a Hard PlaceAmericans who need transportation for work, school and family obligations but cannot afford to buy a fuel-efficient vehicle often buy cheap gas-guzzling SUVs and trucks. Unfortunately, those cheap vehicles add to the problems of poverty because of the increased demand for high-priced gasoline.As is often the case, the poor suffer the most from errant government policies.
