What Determines Gas Prices?

It’s time to stop blaming the president for the price of gasoline; that’s one of the few things he doesn’t really have a say in. Quite honestly gasoline prices are determined by, like most things we buy, supply and demand. It all depends on the market.Speculation and futures play a role.  As tension rises in oil producing countries, so does the price of oil.

It is important to realize that crude oil and gasoline are two different things. Gasoline is refined crude oil. The refining of gasoline adds a little to the price per gallon. This means that . The price increase changes with the cost of refining and distributing the oil.There is a strong, direct correlation between the price per barrel of crude oil and the price per gallon of gasoline. (A barrel is 42 gallons.)

Supply and demand is the biggest factor in determining the price of gasoline. Basically the more gasoline you have the more the price will decrease. Since the US gets most of its oil from inside of its borders. in addition to U.S. production, Relations with other places where we get oil also factor into gas prices, The value of the dollar is another major factor. Also, certain times of the year like Christmas and summer you can expect to see price rise some, due to the large amounts of people who are expected to be travelling.

The President may have some influence over taxes, with Congress, but he really has no major control over the regulation of gasoline prices. No one person or group decides America’s gas prices. It’s a combination of the different factors of both the business and consumers.

Sources:

http://www.gao.gov/new.items/d05525sp.pdf

http://www.eia.gov/petroleum/gasdiesel/

http://www.eia.gov/Energyexplained/index.cfm?page=gasoline_factors_affecting_prices

http://www.theatlantic.com/business/archive/2011/04/what-determines-the-price-of-gas-a-visual-guide/237968/

 

 

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