The price of gasoline is affected most by the price of crude oil. The price of crude oil has been creeping up through most of 2010 because of perceptions that the global recession is winding down. If the world economy improves, more oil will be needed to drive it, and the increase in demand (for a commodity in limited supply) will drive the price up. The single most important control on world consumption is US car drivers. As the economy improves, and more gasoline is consumed, the price of oil goes up and therefore the price of gasoline goes up.
The price of oil in the past few weeks has seen a slight reflection of worries about the situation in Egypt – mainly that the transporation corridors (the Suez Canal and the Sumed pipeline) might be compromised, and the worry that the troubles could spread to significant players in the oil world (Egypt is not among them; it is a net importer).
Gas prices increasing is also nothing new. Price increases in gas can often be attributed to changes in the world crude-oil market which means anything going on that effects these markets will effect price as well. Hurricanes that damage off shore oil platforms, military activity that make harvest and shipping difficult, increasing demand from specific countries. Demand can also effect prices, summer is a high driving season with vacations and the like, and prices rise because people will pay. When prices reach high enough numbers, the decrease in driving and therefore demand will lower them. Some states in the US like California have different laws mandating the use of cleaner-burning fuels, which is more expensive and drive up prices.
The link below has a great summary of reasons for general gas price fluctuations.
Gas prices are increasing all the time. The price of gas is connected with crude oil. Because we are running out of oil, it is getting more expensive. The price of oil is also regulated by forecasters. They forecast the prices in relation to what else is going on in the world, including temperature and economy. This is why gas prices go down during the holidays, and why we didn’t get huge spikes in gas prices during the gulf tragedy.
A number of different factors can affect the price of gasoline, but as the other commenters here have stated, the most direct factor is the price of crude oil. Of course, that begs the question; why is the price of crude oil going up?
Crude oil prices may go up and down due to a number of factors in the short term, including geopolitics (likely the source of part of the price rise today) as well as weather and other factors that may result in temporary supply disruptions. But the fundamental, underlying factor is that as easy and cheap crude oil is produced and then consumed, the remaining barrels of oil become more difficult and expensive to extract, until ultimately we must reach a point when continuing to increase the supply becomes impossible, and it must then decline. Like gravity, what goes up must come down.
While the petroleum industry has fought fruitlessly for years against the idea of an inevitable peak and eventual decline in the supply of crude oil (though they have succeeded in distracting the public’s attention), there is a fundamental mathematical proof of the concept of peak oil based on physical first principles, namely the maximum entropy law, and the date of the peak can then be estimated from the best available knowledge of existing discovered oilfields.
Click here to cancel reply.
Sorry,At this time user registration is disabled. We will open registration soon!
Don't have an account? Click Here to Signup
© Copyright GreenAnswers.com LLC