Everyone's Gasoline Problem

Everyone’s Gasoline Problem

When it comes to the price of a gallon of gasoline, it’s almost a given that the price will not stay the same from week to week. What causes these fluctuations though? Is it politics? Or is it supply and demand? To give the quick and dirty answer, it is a combination of a few factors that all contribute to the non-stable price of today’s most used refined product.

“The single biggest factor in the price of gasoline is the cost of the crude oil from which it is refined. In recent years, the world's appetite for gasoline and diesel fuel grew so quickly that suppliers of these fuels had a difficult time keeping up with demand” (http://www.eia.gov/energyexplained/index.cfm?page=gasoline_factors _affecting_prices). Not only does the demand for gasoline has a direct collation with demand but also indirectly affects the overall economy which can speed it up or slow it down. When the economy picks up, suppliers of goods want to move more products to be sold to consumers. This means more trucks and ships to deliver goods to their destination and thereby using more fuel. Consumers in turn will drive more to go shopping for goods and services. This will in turn cause delays in supplying more gasoline and diesel resulting in high fuel prices.

“The cost to produce, transport, and sell gasoline to consumers includes: The cost of crude oil,

Refining costs and profits, Distribution and marketing costs and profits and Taxes”

(http://www.eia.gov/energyexplained/index.cfm?page=gasoline_factors_affecting_prices). Even though the costs of distribution and marketing, refining costs (except in California) and taxes pretty much remain relatively stable, it is the price of crude oil that fluctuates on a daily basis. Here is where speculators, politics both domestic and international and the overall health of the global