Gas price is shattering records. Average gas price was passing $4.00 a gallon in May 2008, and it does not seem to stop there. Since then gas price just keeps going up and up.
What are forces that impact the gas price?
According to the Department of Energy, United States consumes over 178 million of crude oil per day. The demand of gas price in the United States usually peak during the summer, because a lot folks go on vacation. There are a lot of holiday during the summer like Independence and Memorial Day.
In addition, gas price can increase due to world crude oil market. There is no doubt about the fact that biggest portion of gas goes to crude oil suppliers, especially the Organization of the Petroleum Exporting Countries (OPEC). The price of a barrael of oil is determined by the amount of crude oil these countries produce.
In some situations, gas price can go up, even if there is a lot of crude oil in the market. Why? Crude oil can be classified as light and heavy. Light oil is cheaper and easier to refine. Unfortunately, there are not too many of them. There is a lot heavy crude oil left in the world. However, it is costly to refine them.
Part of the money from your gas price also goes to gas station markup and federal excise taxes. Taxes can vary from state to state for several reasons, but generally federal excise taxes are around 27.4 cents per gallon. |
