Friday, April 1, 2011

More Research

I did some more research into finding out why gas prices are continuing to increase. I was pleased to find some great answers at http://www.financialnut.com/why-are-gas-prices-so-high-now/. Like I said before the cost of  a gallon of gas is mostly deteremined by the cost of crude oil, about 71%, 14% taxes, 10% marketing and 5% towards refining. The expansion of many countries economies have increased the demand for oil because oil is what drives these economic booms. With a much higher demand for oil and the supply not increasing, the obvious answer is to charge more for the oil. I also found it interesting to know that exchange rates play an important role as well because oil is exchanged in dollars. So the value of a dollar is quite important to the price of gasoline. The most interesting thing I found though, was basically that politics doesn't play as major of a role as I thought it did. Yes, government does play a important role in pricing gas but no to the extent I once believed. I think the idea of economics just makes a little more sense to me rather than just blaming it on other things. Again, I do realize that the government does play a role in the pricing of gas but I just think the economics plays an even bigger role.

2 comments:

  1. I never really think about gas prices increasing but, lately I've noticed how drastic it has been. Now, that I have a car on campus, I am paying for my own gas, and try not to ask my parents to help me out because I have a part time job. I am hoping that gas will not increase anymore but, with our economy and the stats you showed, it most likely will be. Interesting facts though you explained definitely makes you think.

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  2. I'm curious about the mark-up on gad both by distributors and by the local gas station. They don't provide gas a as a service--they have to make money on it. What is the mark up on Gas?

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