Gas Ain't Gitin' No Cheaper
Gas is still costin' plenty and that ain't gonna change anytime soon. With all the talk of how expensive gas has become and how the prices aren't going down anytime soon, it's a good time to take a look at some of the reasons for these skyrocketing gasoline prices.
In this post, we're going to explore these factors in depth, as well as offer some advice on dealing with high fuel costs. Perhaps you'll find that there are things you can do to help make your commute more enjoyable during these tough times.
Two things really drive the price of gas: supply and demand. You probably won't be surprised to hear that prices are highest when these factors are in conflict. When there isn't enough supply to meet demand, prices go up. When there is too much supply of oil relative to demand, the price goes down.
Let's look at how both of these factors affect gasoline prices, and how you can take advantage of them for your own benefit.
Supply
Oil is a commodity and its price is largely determined by the law of supply and demand: the more fuel you have available, the less valuable it will be compared to other commodities in short supply.
Typically, when supply rises, the price falls. When supply contracts, the price goes up. This is because supplies are limited, and so we expect to buy fewer units at a time than we would otherwise.
However, there is going to be some range in which this is true; it all depends on how much oil a nation has available. The more oil that's available for sale at any given time, the lower the value of fuel compared to other commodities and therefore the higher its price will be.
This makes sense – if there is more to go around, then each unit should sell for less; if there isn't enough oil available then each unit should sell for more.
Think of a photographer who wants to buy a camera. If he's the only one that wants to buy a camera for an entire year, then he can ask for a really good price and expect to get it. However, if all of his competitors also want cameras and there isn't enough supply to satisfy every customer, then he's going to have to pay top dollar.
Prices are somewhat elastic: they can be pushed up or down depending on how much supply is available in the market at any given time. Of course, if the demand stays the same, prices will just go up!
One way you can take advantage of this law of supply and demand is by stockpiling gasoline when it's cheap.
Conclusion:
Gas prices are highest when there is too much supply and too little demand for fuel in the world. Keep an eye on the news and the market and watch for times when gas is cheap. Hang on to your savings, though: if you're filling up at a low price, chances are it will go down even further just before you get to refuel!
Demand
The second factor that drives oil prices is demand. The more people want oil, the more they will have to pay for it; the less they want it, the less they'll pay.