Nobody downloaded yet

(Economics major) The factors that influences our current gasoline price. ( crude oil, tax, etc..) - Essay Example

Comments (0) Cite this document
Summary
The Factors That Influences our Current Gasoline Price Gasoline, just like any type of commodity in the market available for sale, is typically governed by the laws of supply and demand. While this is true in some measure, other factors play a significant role in determining its current price…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER92.2% of users find it useful
(Economics major) The factors that influences our current gasoline price. ( crude oil, tax, etc..)
Read TextPreview

Extract of sample "(Economics major) The factors that influences our current gasoline price. ( crude oil, tax, etc..)"

Download file to see previous pages To further explain, the following component and circumstance are explained on how they affect the price of petrol. Factors That Influences our Current Gasoline Price 1. Crude Oil Of all the factors that influenced the cost of gasoline, the cost of crude oil is the single most significant factor that influences our current gasoline price. It accounts up to 55 % of the total gasoline price. The cost of crude changes over time and varies among different regions of the country and the world. Crude oil cost, just like any commodity in the market is also determined by the law of supply and demand. As the law states, when supply cannot keep up with the demand, the price will naturally go up. This is also the case of crude oil where demand is perpetual while supply can be precarious due to a lot of factors. The price of gasoline is influenced by both the demand and the supply side. On the demand side, it is us consumers who determines it according to our consumption of energy and also generally the world’s economic growth or downturn. This happens when there is an economic growth where demand for energy increases and that means that the requirement for fuel will also naturally increases and that will translate for higher prices in crude. ...
OPEC exerts a significant influence on the price of crude because its member countries constitute 43 % of the world’s crude supply in 2010. That is more than half of the world’s requirement for crude coming from a single entity or organization that it can literally dictate the price of crude my contracting production or by overproduction. When the nations that comprise OPEC choose to raise the price of crude oil, all it has to do is to reduce production and that will immediately in the price of crude. Because when there is scarcity of supply or a fear of future oil shortage, price of crude will inevitably go up. Classic example of this would be the incident in April 2001 when OPEC reduced its oil output by one million barrels per day which jacked up the prices of gasoline in the following month. The Role of OPEC While it is OPEC that accounts 43 % of the world’s supply of crude that it can dictate the amount of crude by merely contracting its supply, it cannot however do so in a whim. It has to maintain a certain price to subsidize its future exploratory cost for oil and also to shield itself from the depreciation of the dollar of which oil contracts are denominated. OPEC doesn't want oil prices too high, or alternative fuel sources start to look good. OPEC has said its target price for oil is between $70-$80 a barrel. (See High Oil Prices Caused by Wall Street, Not OPEC)(Article updated April 15, 2011) 2. Refining Cost Crude is the raw material of gasoline. But before crude can be made into gasoline that can be sold in gasoline stations, it has to be processed and refined first. The characteristic or type of gasoline that is made available is highly dependent on how it will be processed at the refinery where it is being produced. This ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“(Economics major) The factors that influences our current gasoline Essay”, n.d.)
Retrieved from https://studentshare.org/environmental-studies/1423130-economics-major-the-factors-that-influences-our
((Economics Major) The Factors That Influences Our Current Gasoline Essay)
https://studentshare.org/environmental-studies/1423130-economics-major-the-factors-that-influences-our.
“(Economics Major) The Factors That Influences Our Current Gasoline Essay”, n.d. https://studentshare.org/environmental-studies/1423130-economics-major-the-factors-that-influences-our.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF (Economics major) The factors that influences our current gasoline price. ( crude oil, tax, etc..)

Forecasting Crude Oil (Spot Price) Volatility

...oil are used to predict or forecast volatility (uncertainty) for purposes of developing effective policies and decision making processes (Campbell, Lo, & MacKinlay, 1997). Forecasting volatility of crude oil prices have been done for a long time via the structural models. However, structural models for forecasting uncertainty in the prices of crude oil are prone to greater challenges of complexity and existence of known and unknown variables to be used (Lee & Zyren, 2007). As a result, structural models have yielded inaccurate volatility forecasts for crude oil prices...
20 Pages(5000 words)Dissertation

The Relationship Between the Retail Price of Gasoline and the World Demand for Crude Oil

...Analyze the relationship between the retail price of gasoline and the world demand for crude oil. To understand the relationship between the price of gasoline and the demand for crude oil , we’ll first need to understand the dynamics of both gasoline and crude oil individually. Like many commodities being traded in the global market like gold, silver, rice, wheat etc. crude oil is also traded. The main reason for it being traded in the global market is that it’s one of those commodities which is unevenly...
4 Pages(1000 words)Essay

Crude Oil Marginal Concept

...every additional barrel of crude that would have been otherwise explored; are as follows: EFFICIENT EXPLORATION: crude oil is explored by drilling land deep down and pumping liquid which is then refined and various products extracted from it. Drilling and refining firms shall develop more efficient ways of exploration that reduces level of damage to land as well as wastage while exploration. REDUCE USAGE: Crude oil produces many products such as heating oil, petrol, diesel, jet fuel, and propane, plastics, artificial food flavorings etc. Main usage in form of fuel for many purposes shall be reduced. For instance,...
2 Pages(500 words)Case Study

Gasoline Economics

...Gasoline Economics (A). Gasoline demand and supply (and equilibrium) The demand for and the supply of gasoline in the market are determined bysome special factors. For example demand is governed by the price of gasoline, the availability of substitutes, price of those substitutes, geographical proximity to the place where substitutes are available, incomes of individuals, prices of automobiles, government taxes on gasoline and Supply constraints such as the availability of oil and gasoline deposits and the rate that new...
7 Pages(1750 words)Essay

Crude oil prices

...Running head: Research Methods: Price of Gas in USA Research Methods: Price of Gas in USA s Solution to the problem is found out by research in a scientific approach. To find a solution to the problem by research requires identifying and analysing the nature of the problem and experimenting with the new methods to find a solution. The first step to research is to select the basic method by which the problem can be identified and analysed. The present study is to find out the causes for the disproportionate escalation of the price of gasoline than the price per barrel of crude oil and its effects on consumers. Methods of...
2 Pages(500 words)Essay

Crude Oil Transport System

...finds interesting: first, amongst all the bulk goods, international trade in crude oil is the largest in terms of volume, value, and shipping capacity; second, the global transport system is entirely dependent on the crude oil transport system (Greene, 2005); and third, crude oil has unique economic, social, and political factors worth discussing. In 2004, 1.774 billion of the total world crude oil consumption of 1.855 billion tons (BP, 2005) was transported by sea, accounting for 26.2 percent of world seaborne trade by weight (UNCTAD, 2005, Table 4), and the single...
12 Pages(3000 words)Essay

The relationship between crude oil prices and gasoline prices

..., travel, or the shipping of products into the market. When the prices of this essential product go up, people have to decide what products to buy in the market and what products to forgo. The production cost often influences prices in the market. In the same way, when gasoline prices go up, the production cost of products also shoots (Averdunk, 2010). The factor that influences the above price fluctuation is crude oil prices. Crude oil prices have an influence upon individual spending....
5 Pages(1250 words)Essay

Brent Crude Oil

...specific factors that cause this sharp decline in the oil price (Menton, 2015). The strength of the American dollar is a key driver for the steady decline of the oil prices. The current global market has been under tremendous competition with the United States dollar being a key determinant of majority of the things. With the strong US dollar, the average price and value of majority of the commodities fall. This has greatly affected crude oil, whose price has been constantly declining. With global prices of commodities...
2 Pages(500 words)Essay

Price drop of crude oil

...PRICE DROP OF CRUDE OIL Price drop of Crude Oil Introduction Crude oil is a determinant of economic progress. Therefore, the fluctuating price per barrel is of importance to the oil dealers and nations at large. In the recent past, the prices of crude oil have experienced a rapid decline in the world’s oil market. The changes have made various countries that entirely depend on oil exportation have experience quite a hard economic time as a result....
2 Pages(500 words)Essay

Crude oil prices

...Crude Oil Prices Price drop of Crude Oil In the recent past, the prices of crude oil have experienced a rapiddecline in the world’s oil market. Various countries that entirely depend on oil exportation have experience quite a hard economic time as a result. According to economist in the oil industry, a combination of factors has played a significant role in scaling down the prices of crude oil. Some of them include the oversupplying of the product,...
3 Pages(750 words)Research Paper
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic (Economics major) The factors that influences our current gasoline price. ( crude oil, tax, etc..) for FREE!

Contact Us