| The cost of filling up your car's gas tank is rising again. | | | | can only be produced by a limited number of refiners. |
| Because crude oil prices are climbing fast, prices at the | | | | This makes the price more dependent on disruptions in |
| pump could exceed the highs of 2009. | | | | supply or spikes in demand. |
| Why are gasoline prices moving into record territory | | | | If you would correct the current record gasoline prices |
| again? There are economic reasons of course like the | | | | for inflation they would lose some of their drama. And |
| falling surpluses and the falling dollar. Cold weather | | | | compared to many other developed nations, prices in |
| plays a big role as well. | | | | the United States are still very affordable. Maybe this |
| If consumers got cheap energy in 2009, the trend for | | | | is why American car manufacturers never felt the |
| 2010 could be upwards. | | | | pressure to build fuel efficient engines. |
| How is the price of gas decided? | | | | Are the gas companies profiting? |
| Crude oil is the first component. Add to that the taxes, | | | | Some consumers are always finger pointing at the big |
| refining costs, marketing and distribution of gasoline to | | | | oil companies. Are they making illegal agreements |
| get a final pump price. | | | | amongst themselves to keep prices high? Over the |
| Demand is growing worldwide, particularly in China and | | | | years numerous government investigations have |
| this has an effect on the prices of crude oil. | | | | never found any evidence of this. |
| Political instability and bad weather can limit supply. So | | | | In a free economy prices are determined by the laws |
| do other production disruptions like accidents at | | | | of supply and demand. But since demand is relatively |
| refineries. | | | | insensitive to price changes, this mechanism does not |
| In the long term, higher crude prices always lead to | | | | work very well and gasoline prices are always very |
| higher prices at the pump. But this takes some time | | | | volatile. Even when gas is expensive, you still keep |
| because most oil is sold under long-term contracts, | | | | driving to work, don't you? |
| which are a bit different from the "spot" prices you | | | | So what can you do? |
| see in the news. | | | | You need to do some research when you are |
| Why can prices vary from state to state? | | | | shopping for a new car. Gas mileage is a big issue |
| The biggest difference across states is the State tax. | | | | nowadays and the effect on the cost of owning your |
| Some states, like California have a unique blend that | | | | car for many years can be quite impressive. |