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The gas prices in the market influence the way people budget, 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. An individual has to make a difficult decision in order to scrap what is less important when prices shoot. The effects of the crude oil prices often influence the operation of many companies because these companies depend on products derived from crude oil. It is important to identify the relationship between crude oil price and gasoline prices in the market. Market prices of products derived from crude oil often feel the impact of change in crude oil price.
Research indicates that a 15% tumble of crude oil prices leads to 5% drop of the gasoline prices (Swag, 2004). Notably, the gasoline firms would present the same pump prices for the gasoline products. All the oil companies would present the same gasoline prices in the market. This research further indicates that many motorcar owners would face the same influence whenever the crude oil prices go up. Crude oil prices seem to be equal throughout the producing countries. The research also noted that crude oil prices are universal. Thus, the effect of crude oil prices in the market would influence the operation of many activities in different countries. The difference in gasoline prices in the market would result in other cost such as overhead cost.
Overhead cost influences the profit that a company would make, thus influencing prices of products of the company. On the other hand, competition that exists among the gasoline companies would influence how the prices of
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The level to which fuel price fluctuations as affected by global demand for oil, which in turn affects transport costs can only be explained using supply and demand theories. This paper will discuss how fuel price fluctuation is affected by global demand for oil, which in turn affects the transportation cost.
Why are Gas Prices Inflated? There are numerous theories doing the rounds every time there is an increase in the price of gas. Increase in prices of gas is inevitably followed by economic instability with direct impact on inflation. In the 90’s the West Texas Intermediate (WTI) crude oil was priced at 20 dollars a barrel.
The researcher of this essay presents the actions of a succesful manager seeking the most profit for company specializing in oil products. For example, a manager can hold back supply in times when there is a need to set higher oil prices or oil products can be held back in order to prevent flooding the market with excessive oil supply.
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 distributed on the surface of earth.
Factors affecting demand and supply of crude oil and natural gas have also been discussed.
According to economics theory, there is deemed to be a relationship between natural gas and crude oil prices. This is based on the fact that natural gas and crude oil are substitutes in consumption, as well as rivals, in production (Villar, Joutz).
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.
The aim of selecting any business research method is to give most useful information to the key decision-makers in a most practical and cost-effective way.
The prices of light, low-sulphur grades like American WTI and North Sea Brent grades have at times, risen much faster than those of so-called heavy crude grades that contain sulphur content. For Example, the price of Russian Urals Blend, a heavy grade has occasionally been almost 7 dollars lower per barrel than Brent.
For example, each additional ten cents per gallon adds as much as $14 billion to American gasoline expenses. In order to understand the importance of gasoline for the national economy, it is essential to look at the market and what factors are affecting the price of gasoline.
The global economy is rising at a very fast pace and any corrective action by central banks or Government is not likely to have a perceptible effect if recession sets in. The dependence of the economy on oil has reduced considerably with the strengthening of the IT and services sectors.