Why Is Gas So Expensive

The situation at a gasoline station today is quite gloomy because of constantly escalating gas prices in the world market. According to some government and industry high officials there are some significant factors that impact fuel prices round the globe:

Rising demand, declining supply

Gasoline’s cost depends largely on supply, demand and competition like other trading goods. There are some inherent discrepancies that pose against us on following three fronts:

  • Due to persistent decrease in oil reserves the drilling of crude oil is no more an easy task in today’s world. An increasingly expensive crude oil exploration into the far-flung corners and crevices of the world coupled with more and more sophisticated, modern oil drilling techniques are required to increase supply.

Expensive Gas Why Is Gas So Expensive

  • World demand for fuel has risen drastically, as developing nations such as China and India are already yelling for a greater share of fuel.
  • Almost all the world’s oil reserves are regulated by their national oil companies. Now most of these companies are in located vulnerable sites like the Middle East, Nigeria, Libya and Venezuela.

Componential costs of gas.

As per current record of the Department of Energy, the significant componential breakdown for a gallon of gas is as under:

  • Cost of Crude oil

A range of costs, almost 75%, forms the proportion of the price oil refineries pay for the crude oil. So when host countries increase the price of crude oil, as they do quite often, the gasoline costs at the pump quickly follow the escalatory trend.

  • Taxes

On an average scale, federal, state and local taxes constitute about 10 percent of the total costs incurred on the commercial supply of fuels.

  • Refining

10 percent of the total price constitutes the operational cost incurred on refining the crude oil into useable products, such as gasoline, diesel, etc.

  • Market distribution

Rest of the five percent is the average retail price of gas at the pump excluding the sum of the other three components, in addition to the costs associated with operating gas stations.

Gas station expenses.

The overall price is inclusive of the costs incurred on running a service station. Breakdown of such costs may include rental charges of the station, salaries of the crew and service charges accrued on receiving payment through credit and debit cards, provided station operators have opted for such mode of transactions.

Interchange fees, another component of the cost, involves monetary transactions based on accepting cards the gas retailers pay to the bank; this enables the payment system to function.

Learning causes of gasoline price hike isn’t much bothersome, however, when you happen to know WHO is the guiding force behind this hike and on WHAT purpose. This is much intriguing and may make you politically apprehensive.

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