Americans drive three trillion miles a year, equal to 820 trips between Pluto and the sun. The United States uses 178 million gallons of gasoline a day. A spike in gas prices affects everything from the cost of bread to the amount of taxes available for community needs. A sharp rise or fall, instead of more gradual movement, can have a huge impact on the world's economy. Gas prices are largely controlled by OPEC, or the Organization of the Petroleum Exporting Countries, an organization that includes Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela.
Before 2009, Indonesia was a member of OPEC, but chose to suspend its membership in January of that year. The organization's 12 countries control 40% of the world's crude oil supply. This puts it in the unique position of having a lot of influence on the price of gas around the world.
OPEC controls gas prices by either increasing or decreasing the amount of oil available. If the amount available goes down, the prices go up. This is the law of supply and demand. The organization may choose to lower their available inventory by slowing down production or by putting more of the oil produced into reserves. To increase the amount of oil available, the members begin to produce more oil, or open up their reserves as inventory.
This increase or decrease in supply can affect the cost of oil in indirect ways as well. If the amount of oil is decreased, the price of crude oil increases, but not only due to the amount of oil available. Gas production companies, the companies responsible for refining and then selling the oil, may get nervous over a decrease in crude oil coming from these countries. To protect their profits from further decreases, they may raise gas prices even more. Just the threat of decreases in oil production can raise gas prices.
The purpose of OPEC is to try preventing any sudden, extreme changes in gas prices. If one country is not producing as much oil as normal, they have other countries pick up the slack to stabilize the market. They are responsible for keeping the gas prices from falling too low, normally trying to avoid prices of below $50 US Dollars (USD) a barrel.
The members meet twice a year, in March and September, to discuss the world economy and oil production rates. New policies may be voted on, new memberships approved, and a chairman of the board is voted into place. Each member country sends a "governor" to the meeting, who is a representative of his or her country, and casts votes based on the needs of that country. OPEC may also call special meetings in times of crisis if there is a problem that needs immediate resolution.
The cost of crude oil controls more than just the price of gasoline; heating costs are also affected. Higher gas prices also influence the cost of travel. If gas prices are high, car buyers are more likely to buy smaller, more gas efficient vehicles. Fewer families can afford to travel, decreasing the money brought into the economy by tourism.
The United States, Canada, Mexico, Russia, and China, among others, all produce oil, although they are not members of OPEC. It is hoped that through better refining techniques and more research in other forms of energy, the world's need for gasoline can be greatly reduced, thus reducing the influence of this organization on the price of gas.