What exactly determines gas prices

Question

What exactly determines gas prices

Answer 1

Supply and demand mainly, as well as production and delivery costs, which includes taxes and mandated formulas.

Some of the factors are global, such as the price of oil, others are local, such as the cost to operate a gas station in any specific neighborhood.

Answer 2

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Answer 3

It all revolves around supply and demand.

Supply is ever decreasing, because gas is a finite resource. However, demand for gas is ever increasing because emerging economies such as China and India are always demanding more gas to boost economic growth. Therefore, gas prices rise accordingly.

Answer 4

Yeah, it really is supply and demand in a given market - generally a national or regional market for refined petroleum. The supply is based upon output from refineries and delivery capabilities of wholesalers, so if there is a shutdown at a refinery (Louisiana following Katrina) or if weather prevents trucks from delivering fuel (Arizona, 2005), the supply is constricted and this causes a temporary price spike until supply is restored.

If you notice, gas prices move with oil prices but are not perfectly correlated - ie, oil closing at $121.48/bbl doesn't always mean gas will be $3.62. However, competition encourages the passing on of lower oil prices to consumers in the form of lower gas prices.

Answer 5

Supply and demand but also...the price of gas is above what it would be because of taxes.