Will someone PLEASE explain gas prices to me??

Question

Why does the price of gas change so often? I mean, do oil companys have a quota they try to reach every week, so they base the price on how much they pump that week? It just makes no sense to me

Answer 1

Capitalism + greed = high prices. Period.

Answer 2

What doesn't make sense?  Gas prices used to be based on supply and demand.  The more the supply and lower the demand, prices would be low.  The higher the demand and the lower the supply the price would be high.

Now its the fact that so many investors are investing in oil because the dollar and the US economy is doing poorly.  This inflates the price, and the fact that oil companies can charge what they want for gas and we have to pay it, being a need in the US.

At the current state buying less won't effect the gas prices.  If you want to pay less for gas, buy an electric vehicle, or just wait for something to happen where the bubble bursts and gas prices drop to a sane level, or the price keeps increasing until we can truely not afford to drive and our economy just crashes and burns like it is heading.

Answer 3

theres a demand for gas

soo they always increase it

cuz they know well pay it

Answer 4

gas prices are up to keep your mine off heath care!

Answer 5

they adjust their prices by the price of crude, and additives...daily

opec sets the price, we pay it, that's it...

Answer 6

The low value of the dollar has some affect on the price of oil.

which is used to make gas.

The basic reason of high gas price is supply vs demand. Oil is traded on a global market based on supply vs demand. It's not that the supply is down from years past. It's that the demand is high world wide. With the developing countries like China (the demand for oil in China went up 30% in 2003) and India it will only get worse.

We have to find a way to do without oil!

Answer 7

Gasoline is a commodity. That means it's basically the same no matter where you get it, especially prior to delivery to your local station. When your local station owner gets a delivery, he pays the rack price he qualifies for, based on volume. That price can change daily, based on spot market pricing. This means the value of what's in his tanks fluctuates with market prices.

Think of it this way: You have a gold ingot. You bought it five years ago, when gold was $350 an ounce. Now, gold is selling for $950 an ounce. Someone convinces you to sell them an ounce of your gold ingot. What price are you going to sell it at? $950, of course. That's the value of an ounce of gold, everywhere in the world.

Now change the scenario. You bought the gold ingot today and in two years, gold is selling for $400 an ounce. Someone comes to you and offers to buy that ounce of gold again. You want to sell it for $950, in order to not realize a loss, but the buyer is only willing to pay $400. You can't sell for $950, because the value is only $400 and since gold is a commodity, it's the same anywhere and someone else will be willing to sell for $400, if you're not.

The same principles apply to gasoline. As a consumer, you can go to any station and get a servicable gallon of gasoline. If one station tries to charge too much, it will lose some business to a lower priced station nearby. Of course, there's brand loyalty and convenience to factor in, but even as an oil company employee, I price shop. If another Top Tier brand is selling for a nickel less per gallon than my brand, I'll buy the other brand. My loyalty is worth a nickel per gallon in close proximity. Get more than a mile from my brand and the price becomes immaterial, as a nickel per gallon savings for 20 gallons only saves me a dollar.

I won't buy a non-Top Tier gasoline unless I'm in danger of running out, because the savings is more than offset by the wear and tear on my car's engine. There'd have to be a savings of over 20 cents/gallon for me to even consider a discount gasoline purchase, and that's not going to happen very often. My 20 cent threshold is to offset the price of a fuel additive I'd have to purchase off the shelf to regain the detergency I'm losing buying the lower quality brand.

In terms of the price volatility you're seeing today, it's primarily due to investors speculating on gasoline in the spot market and trying to gain a hedge against inflation.  Prices of commodities rise in lockstep with inflation, so you can't lose money and in today's investment markets, not losing money is a pretty good deal.  There's also the issue of the US dollar versus other world currencies.  When the dollar weakens, oil becomes more expensive and when the dollar strengthens, oil becomes relatively cheaper for us.

Answer 8

Yes it's pres. Bush he keeps putting something like 55,000 gal of gas into our emergency supply every day  and not letting it go to us.So then it comes a matter of supply and demand,Bush is doing this along with the war,the price per gal in Iraq is .35 per gal.

Answer 9

It is factored by a gagillion things.

Extraction from Earth, refining, transportation, sales, marketing, paying the insane salaries of the CEO's, donations to various "Earth friendly" organizations to prevent discrepancies in the Oil Image, buying politicians, buying lobbyists, buying Presidents, funding wars. The latest and largest factor has been the inflation rate of the U.S.