| The other day while driving home from work, a smile | | | | 2. Refining Costs- As oil is brought out of the depths |
| crept across my face as I admired $1.67 a gallon at a | | | | of the ocean, we don't wrap it up in a box and put a |
| local gas station. In the midst of a gloomy economy, at | | | | bow on it already; it's got to be refined! And the cost |
| least we can be grateful for a low price at the pump! | | | | of refining our oil puts a fairly large determinant on |
| Rather than costing me over $40 to fill up my little | | | | what we pay at the pump. |
| Civic, I found myself topping off my tank at about $18! | | | | 3. Taxes- Uncle Sam has to get his, right? Federal, |
| Hallelujah! | | | | state, and local taxes can play a large part in what we |
| Why Gas Prices Go Up and Down | | | | pay; in fact, some says just taxes alone account for |
| We've all asked the question. Following are four main | | | | close to 19% of what we pay! Of course, that number |
| things that influence the price of gas: | | | | changes all the time as the prices of crude oil go up |
| 1. The Cost of Crude Oil- If there is one thing that does | | | | and down, but it certainly plays a big part! |
| the most to determine the cost of gas it's crude oil | | | | 4. Distribution of Gas- The gas we pump into our |
| prices; in fact, from what I have gathered, well over | | | | vehicles doesn't originate under the gas pump at the |
| 50% of the price of gas is simply determined by what | | | | Chevron! All the gas companies out there are paying |
| crude oil is being bought and sold for. Every economist | | | | for marketing and distribution of that same gas; so, just |
| will tell you the same thing- a product or service's price | | | | like any business, they help determine some of the |
| is determined by the laws of supply and demand. If | | | | prices of gas just based on business expenses and |
| there isn't as much crude oil being produced as a result | | | | revenues. Though, with all the competition out there, |
| of a hurricane knocking out a number of our refineries | | | | they usually stay relatively the same! |
| in the Gulf Coast, we're going to see a spike in gas | | | | One thing is clear from the above points- we can't |
| prices. On the other hand, as more and more is being | | | | always blame big oil companies for the prices we're |
| produced and supply is higher, typically the price drops. | | | | paying for gas. Often, if not most of the time, the price |
| All products are that way! Also, with China demanding | | | | we pay for gas is most determined by crude oil supply |
| more and more oil, the bidding wars become more and | | | | and demand. |
| more fierce. The United States imports about 2/3 of its | | | | Let's be grateful for the price we're paying right now |
| oil, so as the demand gets higher, the price goes up. | | | | for gas! |