I always wondered about this. Is it because the fuel is too costly? Because the equipment will be trashed?
Three big factors:
- The energy required is large (http://en.wikipedia.org/wiki/Specific_orbital_energy). For a low orbit like the one the ISS is in, it's about a 33 MJ/kg addition from the surface to orbit -- and that neglects atmospheric drag.
- The rocket equation (http://en.wikipedia.org/wiki/Tsiolkovsky_rocket_equation). In a nutshell, you must not only burn fuel to provide delta-V to your payload, you must also burn fuel to provide delta-V to the fuel you need to burn to provide delta-V to your payload. Yeah, this is an exponential relationship.
- Complexity. The system you use to rapidly (it must be rapid if you are using rocketry) convert this energy into delta-V is complicated and must be reliable. With our current technology, reliable, complex systems are expensive to engineer and operate.
Various current technologies try to address these factors to reduce the costs. For example, most space launches launch to the east to reduce that delta-V/energy requirements, item #1, for a mission.
Future technologies may seek to address these issues and therefore reduce these costs. For example, space elevators might eliminate #2 by separating the energy source from the payload.
Reducing complexity or increasing our ability to deal with complexity, item #3, can/would reduce costs as well. For many missions, using robots instead of humans removes whole systems (life support, re-entry systems) and thus dramatically reduce costs. This is a double-edged sword though as some new systems (machine intelligence, dextrous manipulators) might need to be added.
Finally, there are other, smaller factors to consider as well:
- Fuel and the other materials used are, as you suggested expensive as well. Aerospace systems generally have extreme material requirements. The metal must be a specific alloy, the cryogenics must be of a high purity, etc. This adds up.
- Fabrication of components typically requires precision and small tolerances -- both of which increase cost.
- Vehicle and systems are typically built in small quantities. The advantageous economics of Henry Ford's assembly line don't apply.
- The systems are generally contracted for and operated by state entities. These entities have the advantage of generating large amounts of funds via taxation, but have the disadvantage of inefficiencies due to the lack of a profit motive.
Throwing away the equipment used in every launch definitely makes launches more expensive. (SpaceX plans to recover the first stage. This effort has pushed ULA to suggest Vulcan as a way to partially recover the engine block, and ArianeSpace to suggest ADELINE to recover the engine block).
The fuel itself is expensive to a homeowner, but is only a tiny fraction of the launch cost.
The vehicles themselves are expensive to develop, dangerous, hard to test completely, and turns out, really are rocket science.