High oil prices don't immediately effect oil prices it is the refiners that refine crude oil into gasoline and supply and demand factors that directly effect the price of gas. Don't get it twisted though high oil prices will eventually effect you at the local gas pump remember 4.00 a gallon gas ooohhhh, it might be coming back if oil continues to rise like it is
[it's currently over $88 a barrel]. No people it isn't some conspiracy with the government or president Bush or the oil companies that makes gas prices high it's a number of economic factors that determine the price at your pumps. As a matter of fact the government makes more money on gas at the pump than the oil companies check out the video below for the TRUTH on gas prices. Check out my earlier blogs on oil.
The four main components of the retail price of gasoline:
Refiners' cost of crude oil
Refiners buy crude oil from U.S. and foreign suppliers and turn it into many different petroleum products, including gasoline. Refiners paid an average of $17.46 per barrel of oil in 1999, and at that time crude oil accounted for about 37 percent of the cost of a gallon of regular gas. This percentage can vary over time and from place to place.
Refining costs and profits
Besides the purchase cost of oil, refiners incur many other costs as well - for operations and maintenance, capital, employee wages and salaries, and so on - and they also must make a profit. In 1999 these additional costs and profits amounted to about 13 percent of the cost of a gallon of gasoline.
Taxes
Federal, State, and sometimes county and other local taxes make up a significant share of the price of gasoline at the pump, with Federal and State taxes alone accounting for 36 percent. Federal excise taxes are, of course, uniform across the country, at 18.4 cents per gallon. State excise taxes vary but average about 20 cents per gallon. A few States also levy sales taxes on gasoline.
Other cost factors
Finally, getting the gasoline to the 180,000 gas stations in the United States and then to motorists incurs additional distribution, marketing, and retail costs and profits. Most gas stations are operated by independent dealers, who set their own prices in response to their operating costs, local economic conditions, and other circumstances.
While gasoline prices in general can be explained in terms of the above factors, additional factors must be considered to fully explain why prices fluctuate over time. For example, gas prices normally change with the season. Because demand tends to rise about 5 percent during the peak driving months, prices generally follow suit, rising before and during the summer (typically about 3.5 cents per gallon) and then falling again in the winter.
Refiners' cost of crude oil
Refiners buy crude oil from U.S. and foreign suppliers and turn it into many different petroleum products, including gasoline. Refiners paid an average of $17.46 per barrel of oil in 1999, and at that time crude oil accounted for about 37 percent of the cost of a gallon of regular gas. This percentage can vary over time and from place to place.
Refining costs and profits
Besides the purchase cost of oil, refiners incur many other costs as well - for operations and maintenance, capital, employee wages and salaries, and so on - and they also must make a profit. In 1999 these additional costs and profits amounted to about 13 percent of the cost of a gallon of gasoline.
Taxes
Federal, State, and sometimes county and other local taxes make up a significant share of the price of gasoline at the pump, with Federal and State taxes alone accounting for 36 percent. Federal excise taxes are, of course, uniform across the country, at 18.4 cents per gallon. State excise taxes vary but average about 20 cents per gallon. A few States also levy sales taxes on gasoline.
Other cost factors
Finally, getting the gasoline to the 180,000 gas stations in the United States and then to motorists incurs additional distribution, marketing, and retail costs and profits. Most gas stations are operated by independent dealers, who set their own prices in response to their operating costs, local economic conditions, and other circumstances.
While gasoline prices in general can be explained in terms of the above factors, additional factors must be considered to fully explain why prices fluctuate over time. For example, gas prices normally change with the season. Because demand tends to rise about 5 percent during the peak driving months, prices generally follow suit, rising before and during the summer (typically about 3.5 cents per gallon) and then falling again in the winter.
Finally, gasoline prices may also differ from one locale to another, for a variety of reasons. Differences in State and local tax rates, discussed above, are one reason. Another is proximity of supply: how far an area is from refineries. Prices tend to rise with distance from the Gulf Coast, which is the source of nearly one-half the gasoline produced in the United States. The extent of local market competition can make a difference as well, with prices likely to be lower when many competing suppliers are concentrated in an area.
Environmental requirements can also cause regional variations in gas prices. Certain State and Federal laws designed to reduce air pollution require that gasoline sold in some areas of the country be chemically modified to reduce motor vehicle emissions that contribute to carbon monoxide, smog, or toxic air pollutants. These special requirements typically raise the cost of making the gasoline. The pump price of the "reformulated" gasoline required in some cities runs about 3 cents per gallon higher than that of conventional gas, and about 5 cents per gallon higher in California. The price difference is greater in California because its standards are stricter than the Federal standards that apply elsewhere. Gas prices in California also tend to be more volatile than in other States because in-State refineries are hard pressed to meet demand and there are few refineries outside the State geared to provide California's unique blend of gas. Demand surges or supply shortfalls therefore usually tighten supplies and drive up prices.
Environmental requirements can also cause regional variations in gas prices. Certain State and Federal laws designed to reduce air pollution require that gasoline sold in some areas of the country be chemically modified to reduce motor vehicle emissions that contribute to carbon monoxide, smog, or toxic air pollutants. These special requirements typically raise the cost of making the gasoline. The pump price of the "reformulated" gasoline required in some cities runs about 3 cents per gallon higher than that of conventional gas, and about 5 cents per gallon higher in California. The price difference is greater in California because its standards are stricter than the Federal standards that apply elsewhere. Gas prices in California also tend to be more volatile than in other States because in-State refineries are hard pressed to meet demand and there are few refineries outside the State geared to provide California's unique blend of gas. Demand surges or supply shortfalls therefore usually tighten supplies and drive up prices.
remember the Golden rule people he who has the Gold will rule.
P.S- THE TRUTH ON HIGH GAS PRICES [GREAT INFO IN THIS VIDEO PAY ATTENTION]
No comments:
Post a Comment