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What Causes Gas Prices to Rise?

Gas prices tend to climb during summer, as people go on vacations.
The biggest portion of the price of gasoline is determine before it even arrives at the service station.
Weather events like hurricanes can cause gas prices to rise.
The price of oil can significantly impact the price of gas.
Gas price hikes can be caused by fears over shortages, seasonal demand spikes, and production decisions made by oil cartels.
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  • Written By: Dana Hinders
  • Edited By: O. Wallace
  • Last Modified Date: 22 July 2014
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While the price of bread, milk, and other daily necessities remains fairly consistent, gas prices often seem quite illogical. However, it’s not the gas station owner who is determining the price you pay at the pump. Over 85 percent of the price of gasoline is determined before it even arrives at the station.

As you might expect, supply and demand is one of the key factors that causes gas prices to rise. During the summer, when drivers typically plan vacations, the price of gas goes up. Prices also rise briefly around Thanksgiving, Christmas, and other holidays where people are expected to travel in order to see family and friends. Public fears about a gasoline shortage, such as what happened after Hurricane Katrina in 2005, can drive up prices even further.

Gasoline is made from crude oil, so it seems only logical that the price of oil has a significant impact on the price you pay at the pump. The Organization of Petroleum Exporting Countries, otherwise known as OPEC, controls over 40 percent of the world’s oil production and approximately 65 percent of the planet’s oil reserves. As the market leader, OPEC is free to essentially set its own price for crude oil. As a result, there is no significant competition to drive gas prices down.

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Turning crude oil into gasoline is a complicated process. Unfortunately, the number of refineries in the United States has greatly decreased in recent years. When combined with a growing demand for gasoline, this results in an overall increase in gas prices. Sudden spikes are often the result of a refinery’s mechanical troubles, downtime, or production delays.

If you live in a metropolitan area that mandates the use of clean air fuels, you may be surprised to learn that these fuels can also raise gas prices. While it’s true that clean air fuels reduce pollution and help protect our planet’s natural resources, distributing this special gasoline presents a number of logistical challenges for the manufacturer. These costs are then passed along to drivers at the pump.

Since there are a number of factors that affect the price of gasoline, finding cheap gas prices can be quite difficult. Driving around your town to find the gas station that will save you a few pennies is simply not a practical choice. If you’re truly concerned about high gas prices, the best course of action is to make an effort to reduce your consumption. Keep your vehicle well-maintained to avoid using more gas than necessary and consider making your next purchase a more fuel-efficient vehicle. You can also consolidate your errands to eliminate unnecessary trips, carpool with a friend, walk or bike to your destination when the weather permits, and take public transportation whenever possible.

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Discuss this Article

anon954503
Post 24

The poor people are probably not eating much, as the food prices are ridiculous too, to pay the almost $4 a gallon price. It is always raised before holidays and in the summer when people need to cut their grass. I hope the rich jerks rot in hell because they can't take it with them.

anon357264
Post 23

Gasoline prices are centrally controlled by the same people who print the money. High gas prices are the brakes on the car. If there are economic hard times then it is intentional. Your difficulty is someone's means to an end.

anon337097
Post 22

Bottom line is we the people control this situation. Stop! Just stop! Stop working, stop driving stop going anywhere. All of us control this with our money, our taxes. Stop! Shut these greedy jerks down! Quit being a sheep! Grow testicles and shut them down!

anon247252
Post 20

We are forced to purchase gas. If we want to get to work, school, the store, etc., we have no choice but to purchase gas. If we didn't depend on other countries to supply gas, then this wouldn't be a topic of conversation.

Americans have become depended on other countries for so many reasons. We make these people billions of dollars. Do you really think they give two cents about us and what we can and cannot afford? Hell, they don't even care about their own people. We as Americans should wake up, and depend on America, not another country who would rather see us dead than alive.

anon170923
Post 19

The Democrats have conspired with each other to drive the supply of domestic oil and gasoline produced down in order to force Americans to support the government-subsidized 'Green' industry, because they get almost all of the campaign contributions made by that industry, and they want to keep the money flowing in.

The US can produce plenty of oil if the government would get out of the way - the US has the technological ability to make oil from coal, and has enough coal to produce 10 times the oil reserves of Saudi Arabia, and do it profitably at about $75/barrel, but the federal government won't allow production plants to be built and opened because that will allow us to have cheap gas, not be forced to do what the president wants. Also, now that we see the Gulf has recovered from the oil spill, we could expand domestic drilling, including in ANWR.

I don't care how many wind turbines and solar farms they build, my car runs on gas.

anon168616
Post 18

Thank you for this opportunity and my concern is where is the government in this kind of situation? Is the OPEC the government and can do nothing when there is a shortage or price rise? I think the government should have a plan to subsidize fuel in some way.

I know something can be done but the only point is whoever controls the production of oil, his motive is to milk money from the consumer. It is simple. If the ongoing strikes, say in Libya, can cause us to suffer like this, how many people are behind it? Only one man --Gadafi? So is Gaddafi now ruling the whole world? Get rid of him.

Two governments should create a plan that can last for 30 years or more to reserve fuel that can be consumed over that time should anything happen. I have never heard that a government has run out of weapons. Why? Because that is so sensitive and we do not need to know. Our concern is have you won the war?

Now it should be the same with oil. Transportation is the backbone of any economy. If fuel prices go up, it forces other relative prices to go up even the wages. But if all other prices remain the same, we need a genuine explanation or otherwise some one over there is sabotaging.

anon167753
Post 17

Greed is the reason for the gas price increase. say what you want but that's the bottom line.

anon160286
Post 16

I am currently laid off. There is work out there but it is 60 to 75 miles away and relocating at this time is not an option. If I took one of those jobs, it would cost me more to drive then I would probably make. What it costs me to fill my truck, is almost more than what the truck is worth! Unreal!

anon156996
Post 14

Could anyone out there in our great land tell me the role oil distributors and jobbers play in the affectation of prices of oil and gas? I've heard that they also manipulate local prices and fix price levels to minimize competition.

anon145136
Post 13

this writer does not answer the questions he raises. since none of the factors he says raises prices are happening here in houston in any significant way. it's as though someone just made a statement, "gas prices will rise x amount by summer" and for no good reason, they do!

We all know there are good reasons for gas prices to rise, but this writer doesn't tag it to anything that is actually happening.

ok are the damn arabs raising crude prices currently or not? i don't give a crap what could cause it. i want to know what *is* causing it.

anon136353
Post 12

i lost my job in december of 2009. i leave the house one day a month to stock up. gas prices will never go down as long as the government does not step in. opec needs to be abolished and then crude prices would steady out. it's ridiculous that the gas prices go up and down as frequently as a yoyo: up 25 cents, down 5 cents. Up 15 cents down 4 cents. It's a scam.

anon129176
Post 11

Gasoline consumption in the US is down dramatically over the last two years. Some estimates have it at a 30 percent or more decline. This is due to the slow economy and consumers switching to more fuel efficient cars. So how can gas prices be going up when demand is coming down? Obviously this is a case of price manipulation by the major oil companies.

anon125161
Post 10

I work 60 miles from home and do not have the option for other modes of transportation. No busses, no trains, no one else to car ride with. My only option is to not go to work - which will only create other financial hardships - but it may actually come to this - since I am unable to find work closer to home.

anon65581
Post 8

here is one super economically friendly idea.

ride horses or ride bicycles like the old days!

Bicycles give a workout, right?

anon62303
Post 7

Let us all stop buying gasoline! This is the only way. --pagadian

anon52179
Post 6

It would be better to walk all the way if you don't have the money to afford gasoline oil.

anon31524
Post 5

One might assume, if some "basic simple" equation having to do with supply and demand were actually driving gasoline-pricing phenomena in the U.S, currently, a "sudden spike" in prices would occur around or *after* some holiday, not before.

Sudden unusual short-term demand would reduce the so-called "available" supply (which, considering the possibility of enormous stockpiled reserves, seems dubious at best) and exert price-pressure on the availability of supply in the subsequent days/weeks.

But, historically, this is rarely the actual case. Rather, the price of gasoline jumps dramatically for a number of days *before* any holiday. This seems to represent, quite clearly, the blatant ability of the oil companies to manipulate the market in anticipation of sudden profits based on a simple anticipation of increased auto travel.

petty026
Post 4

there's nothing new about higher gas prices as it always been an issue ever since. And we are all affected! better alternatives is to use electric or hybrid vehicles with fuel saving additives than the fuel-dependent ones.

anon13809
Post 3

Simple, they go into debt, stop paying other bills or if they really need to find other modes of transportation. Bike/bus/train or a combos. You'd be surprised what solutions you can come up with when you are forced to.

sunrisesunset
Post 2

i don't understand how the middle and lower income families are affording the increases in gas prices. many employers are certainly not raising salaries to help accommodate the increase, so how are people affording higher fuel bills?

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