Nobody downloaded yet

Gasoline Prices - Essay Example

Comments (0) Cite this document
Recently, the attention of media has been devoted to increased gasoline prices, larger profits of oil companies and merges of the oil market leaders. Increased gasoline prices have a huge impact on the economy because of the heavy reliance in motor vehicles in developed countries…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER92% of users find it useful
Gasoline Prices
Read TextPreview

Extract of sample "Gasoline Prices"

Download file to see previous pages Increased fuel prices forces American society to find alternative energy sources and motivates the government to invest more into research and development of the cars with less fuel consumption and improving efficiency of the refinery sector.
Crude oil prices have the major impact on gasoline prices. Other factors include refinery capacity in the country, gasoline inventories maintained by refiners which is going downward, regulatory environment (national air quality standards), and the structure of the gasoline market. It is important to note that mergers lead to anticompetitive effects because more power is given to merged companies who are able to increase prices above competitive level. The first wave of mergers has started in 1990s in US when several competing with each other companies have merged. More than 2,500 mergers have occurred at that time - since 2000 only 8 mergers have occurred involving different market segments (exploration, production, and transportation) (Energy Markets: Factors Contributing to Higher Gasoline Prices, 1).
Refining capacity in the United States is not expanding at the same rate as demand for the gasoline. The American average refinery capacity is 92 percent - as the result, there is no room to expand production (Energy Markets: Factors Contributing to Higher Gasoline Prices, 1). ...
Experts attribute higher prices to the expending demand (particularly for the electricity production) while supply is not expanding at the same rate. The balance of demand and supply is especially affected if demand or supply changes unexpectedly. For example, the prices went up at the end of year 2005 when two hurricanes hit the Gulf Coast region (Natural Gas: Factors Affecting Prices and Potential Impacts on Consumers, 1). As it was noted above, the domestic refineries are already working at their full capacity and the fact that the gasoline is imported leads to the shortage of supply. According to market structure principles, the shortage of supply results in increased cost - people will buy gasoline despite of the price they pay.
In 2004 the United States citizens have consumed approximately 20.5 million barrels per day of crude oil accounting for as much as 25 percent of global production. Half of this crude oil was used for the production of gasoline. Data from the Energy Information Administration indicate that the capacity of American refineries is approximately 16.5 million barrels per day. Even though the refineries are upgraded, the majority of them have been built over 25 years ago. By year 2020 the demand for gasoline is projected to increase by 20 percent and the country will not be able to satisfy the domestic demand.
As Karen Matusic has noted, since May 2005 the demand for gasoline has increased by 3.3 percent while the price increased by 35 percent. From supply side, she continues, those refineries that has been destroyed by hurricanes are operating now and the capacity utilization rate rose to 91.7 percent (Matusic, 1). Despite of the increased capacity, the price for gasoline is not ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
(“Gasoline Prices Essay Example | Topics and Well Written Essays - 1500 words”, n.d.)
Gasoline Prices Essay Example | Topics and Well Written Essays - 1500 words. Retrieved from
(Gasoline Prices Essay Example | Topics and Well Written Essays - 1500 Words)
Gasoline Prices Essay Example | Topics and Well Written Essays - 1500 Words.
“Gasoline Prices Essay Example | Topics and Well Written Essays - 1500 Words”, n.d.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document


Cause and Effect on Gasoline Prices

...Cause and Effect on Gasoline Prices Introduction The price of gasoline gases has remained a major issue all over the world. This reason for this is because the price of gases has been fluctuating for a long time creating a lot of instability in the market. The major causes of this fluctuation include: price of crude oil and the effect it has at the pump, depreciation of the US dollar compared to currencies of other countries and its effect on the oil, worldwide demand and supply for crude oil and its effect on gasoline prices and lastly oil futures in terms of the contracts made that agree upon a future...
3 Pages(750 words)Essay

Gasoline Prices Research Paper

...The Weather's Effect on the Price of Gasoline It is a basic principle of economics that if the demand increases, the price will rise. In the gasoline market this is seen during the summer months, when families plan vacations and the demand for fuel rises (Gasoline Prices). It is again seen in the winter as the demand for home heating fuel creates anther increase in price (Gasoline Prices). However, there may also be shorter term influences that the weather has on the price of gas. It is natural to believe that when the weather is clear and sunny that people may want to...
2 Pages(500 words)Research Paper

Gasoline crisis

...TOPIC OUTLINE: Gasoline crisis – what does it mean to our business world? I – Introduction: Oil is a valuable commodity upon which a lucrative industry has been built II – History of the oil industry A. Early history of the oil industry 1. Tar and kerosene made form early distillation process. 2. Industrial revolution took off fueled by coal and, later, petroleum. B. Modern history of the oil industry 1. Russia’s oil production is the largest in the 1800s. 2. U.S. overtook Russia and became the largest producer in the mid-1900s. III – The grip of oil prices in the business world A. The power of oil 1. OPEC emerging as a formidable political force 2. OPEC used oil embargo to exert pressure on the western...
8 Pages(2000 words)Essay

Analysis on how gasoline prices are determined

...Since the past couple of years, the world economy has been on a delicate stage, and growth has been pretty slow. In fact, American and the rest of the world has faced a severe recession and financial turmoil, which has left many unemployed and struggling to live. One of the main reasons for a global recession is gasoline prices, which has seen wobbly fluctuations. In this paper, we will look into the economics of gasoline, and how has it turned into a crisis. Introduction This paper would provide a complete analysis on how gasoline prices are determined, and how are prices influenced. The paper would introduce the determinants of...
6 Pages(1500 words)Term Paper

The relationship between crude oil prices and gasoline prices

...The Relationship between Crude Oil Prices and Gasoline Prices The Relationship between Crude Oil Prices and Gasoline Prices Observable changes in crude oil prices in the market often influence gasoline prices. The influence is due to an obvious reason. The availability of gasoline products in the market depend on the presence of crude oil. The link between the two products influences the stability of the market prices. Largely, market prices of gasoline products change whenever crude oil prices change....
5 Pages(1250 words)Essay

1.Everyones Gasoline Problem. We are all familiar with fluctuating prices of gasoline at the pump. Why does this happen Research the recent history of gasoline pricing in your area, and attempt to relate any fluctuations you observe to documented sup

...Response The economic reason why prices keep changing is the demand and supply laws although there are other key factors why this happens. Companies with stronghold on a country’s gas have the control of its supply and prices, and the ability to decide how much of the gas it demands and to whom it supplies. Gasoline is a very important resource and people must have it to smoothly go on with their daily lives. Therefore, people have no choice but pay for the product regardless of the cost. Most gasoline supplying companies know when the demand is high, and raise the price to maximize the profits margin. According to the demand law that states that all...
3 Pages(750 words)Essay

Gasoline prices

...Prof’s The Myth of Increasing Gasoline Supply Gas prices have been one of the hottest topics this political season, with nearly everyone blaming each other for the rises in commodity pricing. Everyone thinks they have the magic bullet, the solution that will cause gasoline prices to drop. One of the most dangerous of these is the idea that increased production will decrease the cost of gasoline, and that drilling should be increased in places such as Alaska. The idea that this will have a long-term impact on gasoline prices is simply ludicrous, and the only way to actually guarantee a lasting drop in...
1 Pages(250 words)Essay

The price elasticity of gasoline in the United States has been estimated to be 0.15. if this is so, should profit maximizing gasoline stations raise their prices Explain why or why not

...The price elasti of gasoline in the United s has been estimated to be 0.15. If this is so, should profit maximizing gasoline stations raise their prices? Explain why or why not Arguments One of the important concepts that can influence the pricing strategy is price elasticity of demand which shows the change in the quantity demanded of a certain product due to change in the price of the same product. Suppose a certain organization reduces the price of one of its products by 10% and the demand of the same product increases by 20% then the price elasticity is 2. The demand curve of...
1 Pages(250 words)Essay

Should a price ceiling (limit) be imposed on gasoline prices in the U.S. market Why or why not

...Gasoline Prices Ceiling If the government implements a price ceiling on the prices of gasoline, thegovernment will be indulged in legally setting an upper cap or a limit on the price at which gasoline can be sold to the consumers. The government should not get involved in the natural process of markets and should not implement price ceiling for gasoline prices because these price ceiling results in the shortage of gasoline (Krugman 89). If the government imposes a price ceiling below the prices that have...
1 Pages(250 words)Essay

Gasoline Prices: What Were the Oil Experts Thinking

...Gasoline Prices: What Were The Oil Experts Thinking? By Submission Gasoline Prices: What Were The Oil Experts Thinking? Question One The success of any company depends on the ability of the management to draw a sense of direction using various tools that include the mission statements, the vision, the goals and objective. The organization may not matter and the sector too. All that matters is the effect that the items have on the company, which majorly include the creation of a direction, and intentions that the company aims for in the market. The mission statement for the Bureau of labor statistics of the U.S. that lies under the department of labor directs on the...
9 Pages(2250 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 Gasoline Prices for FREE!

Contact Us