Gas prices fluctuate day by day, but is supply and demand really the only thing to blame? The answer is no. According to Business Insider, the EIA states that two-thirds of the price of gas is determined by crude oil costs.
The rest is a combination of factors pushing the price up or down, like an invisible hand.
I did a road trip this summer, and I got to see how the price of gasoline fluctuates from state-to-state. In Moab, Utah the price per gallon is up to $2.40, but back home in Maryland, it’s currently at $2.04. It all depends on how far the gasoline is sold from the source, such as ports, refineries, and pipelines.
Depending on how strong a country’s currency is, gas prices will either be influenced less or more.
If a blizzard moves in, it’s difficult for tanker trucks to supply stations with gasoline, which could drive the price up for a few days. On the other end, if there’s a remarkably blistering summer, the use of air conditioning could drive prices back up.
There’s a federal and state tax on gasoline. The federal tax stays the same while state taxes fluctuate. This explains why gas prices in California might be more expensive than gas prices in Arizona.
Throughout the year, the cost of the refining process varies, affecting prices.
All nations of the world are connected. If word from Iran comes that the oil supply might be disrupted, it could cause gas prices to go anywhere. Also, if there are any major conflicts worldwide, you bet this will impact prices too.
Since OPEC is such a big player in the world’s oil production, any decisions they make can affect gas prices.
These are just a few of the variables affecting gas prices every day, but as we know, the world economy is a complex place. Now when you see the price at the pump changing, you’ll know a little bit more as to why that might be happening.