Just a Little Bit Gassy
You are driving home from work or school when suddenly you notice your gas light has come on. You decide to pull into the closest gas station since you do not want to run out of gas. You begin to fill up your car, and when you are finished, you continue to drive home. Shortly after leaving the gas station, you find another gas station with significantly lower gas prices. A brief moment of frustration passes over you as you realize you could have saved a few dollars or even gotten more gas for the amount you paid. Why are gas prices so widely varied? What would cause the price of gas to go up or down?
When it comes to the price of gasoline, there are many factors that determine how cheap or expensive a gallon of gas is. For those who are unaware, gasoline starts as a form of unrefined petroleum called crude oil. In order for crude oil to be able to become gasoline it must be refined into a combustible liquid that is compatible with our motor vehicles. After the crude oil has finished the refining process, the new gasoline is pumped to gas terminals via pipeline where certain additives,such as ethanol, are blended into the gasoline to meet with government regulations regarding air pollution. Finally, after the gasoline has been finished, the terminals send out tanker trucks to deliver the gas to gas stations around the United States. Every step in this process costs money to complete and is actually what consumers are paying for when they buy their gas.
There are many taxes and fees that go along with selling gasoline. Gas stations in the US are required to pay federal, state, and potentially local government taxes in order to store and resell gasoline to the public. As of Jan. 1, 2018, the total number of taxes on gasoline is a little under thirty cents a gallon. These combined taxes in addition to the sales tax one pays to purchase the gas can have a large impact on the price of gas. Along the lines of many taxes determining the price of gas, the location of where a gas station is positioned also contains a large role in the price of gasoline. As mentioned before, when gasoline is finished being processed in terminals, the gas is distributed to the local communities through the means of large tanker trucks. Although it is not a tax, gasoline sellers must pay what may be recognized as a delivery fee in order to receive their gas to sell which ultimately increases the amount one pays per gallon. In simpler terms, the further a gas station is from a terminal, the more it costs per gallon at the pump. One must also consider the concept of competition for as competing gas stations may raise or potentially lower their prices to out-do their competitor.
Another major factor that determines the price of gasoline is the simple marketing principle of supply and demand. The average price of any product can be recognized as the price of said product when the supply and demand are at an equilibrium (state of balance or equality). When the supply and demand of a product begin to vary, price is dramatically influenced. To put briefly, when the supply of a product is higher than the demand, the price will be lower than average. In the same way, if a product’s demand rises over the supply, the price can be found higher than average. When talking about gasoline, the supply itself tends to remain fairly constant, but the demand of gas has been known to fluctuate throughout the year. Research shows that gas prices are expected to drop in the winter due to lower amount of travel during the cold months. When spring begins, gas prices begin to rise and peak in the summer, as the average travel rate is higher during these times. As one could guess, prices will be expected to drop once more in the fall season.
In conclusion, gas prices are widely varied due to the large amounts of things that can influence it. If you are looking to save a few dollars visit www.gasbuddy.com. This website can help you with all of your fueling needs from gas prices to a map of all gas stations in the United States. Using tools such as GasBuddy can help teenage drivers become accustomed to gas prices and their changes to potentially create a budget for when they are on their own. Natural disaster situations can also cause prices to go up or may cause a shortage in either gas or power. If you find yourself in a situation where a chance of lost power is possible, you can use GasBuddy to locate stores that are still in service. Look out for competing gas stations as this may cause price increases. Also, try to recognize the pattern of the demands for gas as they rise in the warmer seasons and fall in the cooler ones. Although people are able to recognize these changes in price, the changes are almost always random, so when it comes to gas, expect the unexpected… or just get an electric car.