Why are Gas Prices so High?
Gasoline is the lifeblood that keeps all modern societies moving.
In the US personal vehicles alone use over 140 billion gallons of gasoline and diesel fuel each year.
Keeping track of the price of gas often seems a bit like a rollercoaster.
Gas prices are down one month, up the next, and can vary significantly week to week and even day to day.
Gas Prices also vary, state to state, city to city and even block to block.
But what factors actually affect the Pump Price of Gas?This article, summarizes some of the main elements that have an impact on the price of gas at the pump.
Demand - Typically, the demand for gas spikes during the summer, when lots of people go on vacation.
This high demand usually (but not always) translates into higher gasoline prices.
Availability - Price increases generally occur when stocks dwindle - if for example the world crude-oil market tightens or demand outpaces refinery capacity.
The single largest entity impacting the world's oil supplies is the Organization of the Petroleum Exporting Countries (OPEC), a consortium of 12 countries responsible for 40 percent of the world's oil production and holding two-thirds of the world's oil reserves.
Capacity - In the spring, refineries often perform maintenance, which can put pressure on the gasoline market, leading to price increases.
By the end of May, refineries are usually back to full capacity.
Competition - price wars among local gas stations can drive prices down.
Distance - distance from the oil refineries can also affect prices - stations closer to the Gulf of Mexico, where many oil refineries are located, have lower gas prices due to lower transportation costs.
Other factors- World events, wars and weather can also raise prices.
Anything that affects any part of the process, from the moment the oil is drilled, through refining and distribution to your car will result in a change in price.
Military conflicts in parts of the world with lots of oil supplies can make it difficult for oil companies to drill and ship crude oil.
Hurricanes have damaged offshore drilling platforms, coastal refineries and shipping ports that receive oil tankers.
If a tanker itself is lost or damaged, or leaks its oil into the ocean, that may effect the market as well.
In the US personal vehicles alone use over 140 billion gallons of gasoline and diesel fuel each year.
Keeping track of the price of gas often seems a bit like a rollercoaster.
Gas prices are down one month, up the next, and can vary significantly week to week and even day to day.
Gas Prices also vary, state to state, city to city and even block to block.
But what factors actually affect the Pump Price of Gas?This article, summarizes some of the main elements that have an impact on the price of gas at the pump.
Demand - Typically, the demand for gas spikes during the summer, when lots of people go on vacation.
This high demand usually (but not always) translates into higher gasoline prices.
Availability - Price increases generally occur when stocks dwindle - if for example the world crude-oil market tightens or demand outpaces refinery capacity.
The single largest entity impacting the world's oil supplies is the Organization of the Petroleum Exporting Countries (OPEC), a consortium of 12 countries responsible for 40 percent of the world's oil production and holding two-thirds of the world's oil reserves.
Capacity - In the spring, refineries often perform maintenance, which can put pressure on the gasoline market, leading to price increases.
By the end of May, refineries are usually back to full capacity.
Competition - price wars among local gas stations can drive prices down.
Distance - distance from the oil refineries can also affect prices - stations closer to the Gulf of Mexico, where many oil refineries are located, have lower gas prices due to lower transportation costs.
Other factors- World events, wars and weather can also raise prices.
Anything that affects any part of the process, from the moment the oil is drilled, through refining and distribution to your car will result in a change in price.
Military conflicts in parts of the world with lots of oil supplies can make it difficult for oil companies to drill and ship crude oil.
Hurricanes have damaged offshore drilling platforms, coastal refineries and shipping ports that receive oil tankers.
If a tanker itself is lost or damaged, or leaks its oil into the ocean, that may effect the market as well.
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