Question:

Can someone please tell me why does the price in gas change constantly? What is the variable?

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It can't ONLY be crude oil prices....

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  1. overspeculation of oil futures, supply and demand, and a weak u.s. dollar contribute to higher gas prices.  most people falsely accuse oil ceo's and buisnessmen of fixing prices to gain more of a profit, but this is false.  as you might already know the economy is extremely weak, so to compensate for losses on the market, prices have had to go up.  it also doesnt help that opec is not increasing crude oil production.


  2. The changing variable is the contract price a wholesaler buys at for a set amount of petrol.  Once that contract is divided amongst all the stations the wholesaler provides to then the next contract price takes effect and the wholesaler informs all his stations and the price changes.

    Also there is profit taking as well, for example a wholesaler might reduce his retail price to almost no profit to get his petrol sold after the weekend and then he increases it Thursday and Friday to take his profit when everyone buys petrol for the weekend.

  3. The price of all gallons of gasoline in inventory are always priced at or near the cost to produce the last gallon.  This is key to understanding the movement of prices.   You may have noticed that oil went way up in price this week, but gasoline only went up a little, as a percent of its total cost.   Many times the relationship is reversed.  Oil falls in price but gas doesn't.  The reason is that refineries have a certain amount of production already in process, and the costs for that production are already fixed, so the only price changes in gasoline for that short time are related to supply and demand.  in the longer run, it will also be affected by the cost of inputs, namely labor, transportation and raw materials, in this case energy and crude oil.

  4. Inflation.  The gas price is tied solely to the American Dollar.  When the dollar inflates, so does the price of gas.  Years ago it was tied to the price of gold, which stayed valuable.  The dollar is garbage now a days and therefore, the gas price can't stay stable.

  5. Human greed.

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