Throughout my adult life I have been driving automobiles and purchasing gasoline. The price of gas fluctuated a great deal and this was tied, in large part, in the cost of crude oil.
I am also aware that the U.S. controls large reserves of oil which are stored in the event of an emergency if the flow of oil is stopped for any significant amount of time. In theory this cushion should smooth any gaps in supply and keep prices stable.
So why do gas prices fluctuate the way they do? Not only does the price vary by season but pricing varies in different portions of the country outside of if you chose to purchase regular, or premium. It is the same gas? After doing a little research the basic breakdown gasoline costs is, not surprisingly, about half of the price at the pump is due to the expense of crude oil.
County and local taxes account for almost another quarter of the total charge. The variability of these taxes from state to state is responsible to a large degree for the regional variation in the price of gas. The costs to refine the crude oil and profits account for another 17%. Distribution, marketing, retail dealer costs and markup make up the final another 10%.
Some retail outlets are owned and operated by refiners, while others are independent. These businesses purchase gasoline from refiners and marketers for resale to the public. The price at the pump includes the retailer’s cost to purchase the finished gasoline and the costs of operating the service station, local market conditions and the factors.
Price fluctuations will still exist based on demand and other factors. In addition some of these spikes will be drastic and will effect on the finances of many people. Yet as we need to get around and live life we will need to pay the money. So why don’t we all purchase hybrid/electric cars and be done with it?
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