Why Are Gas Prices so High?

I live in New York City so I don't really have to drive anywhere if I didn't want to but, I do have a car: Nissan Altima with a decent MPG. My frequency of driving has gone quite far down since prices have started spiraling out of control. The last time I filled up the tank, regular unleaded was at about $4.15 a gallon. I saw prices at almost $4.40 the other day. These high and ever-increasing prices are incredibly irritating. Even those who do not drive are affected by it because the prices of everything else will also go up as long as gas is used in the transportation or manufacturing of the product. While politicians are trying to come up with bad new policies to try and lower the price of gas, we should be asking: why are gas prices so high?

As a student of Austrian Economics, the recent increase in prices of everything did not come as a surprise. Austrian economists have been talking about the problem of inflation and bad monetary policy for years. Most people hate economics. It probably has something to do with schools generally teaching Keynesian Economics. Did you know how to pronounce that? Probably not. The Keynesian teachings are generally flooded with lots of charts, graphs, and math. I'd imagine most people get turned off by that-I certainly do. Austrian writings are a lot easier to understand and don't turn economics into physics with a multitude of formulas, equations, and symbols.

The simple reason for the high price of gas is inflation. Gas prices are not the cause of inflation but a result of inflation. News reports on the major news networks and syndicated across the Associated Press define inflation as an increase in prices and then go on to blame the high price of oil for inflation. This is a misunderstanding of the monetary system and the concept of inflation. Inflation is the increase in the supply of money which in turn drives up the price of goods and services.