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