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Question:


What causes the fluctuation in gas prices?
-DisgustedDriver


Answer:


The price of the main ingredient of gasoline, crude oil, plays a big role, of course. The price of crude, in turn, is determined by supply and demand. In normal circumstances, economic developments drive the relationship between supply and demand. As the economy strengthens, demand tends to rise as factories increase output, consumers drive more and so on. The rising demand will lead to higher prices, and that will lead oil producers to increase their output, which lifts supply and puts a lid on prices.
 
Sometimes politics affects oil prices, including the most extreme form of politics: war. A conflict in the Middle East, where much of the world’s oil is produced, can lead to an acute run-up in prices as fears rise that supplies will be cut off, although an actual cutoff is rare. Usually prices will come back down fairly quickly in a crisis because crises tend to be short-lived and their impact is often less awful than feared.
 
Gas prices can also leap if a bottleneck occurs during the process of bringing oil from the ground to your car. Pump prices recently topped $5 a gallon in California due to difficulties at some refineries in the state, and events as varied as pipeline or tanker ship accidents and strikes by drivers of delivery trucks can also send prices skyrocketing. As with wars in oil-producing countries, increases related to refinery and delivery interruptions tend to be fleeting.
-Conrad de Aenlle



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