Compare Gas Prices: Knowing The Factors Affecting Oil Price Fluctuations

When it comes to gasoline price issues, everybody will pay attention

. Indeed, all of us are consumers of gasoline in a variety of ways. We use transportation, which is one of the biggest consumers of the oil industry. Even though some of us do not drive cars, we are also indirectly contributing to the industry by buying basic commodities. Whenever gasoline prices are the news feature, everyone is interested.

Many of us are curious about how gas prices easily fluctuate. Gas prices seem to be as fluid and changeable as the actual commodity. Comparing gas prices between states and countries becomes a tough and confusing ordeal. To further understand what makes oil prices fluctuate, let us look at the factors affecting oil prices.

1. OPEC (Organization of the Petroleum Exporting Countries) - The OPEC is an organization that holds a big control on oil pricing. These countries are the oil producing countries that allows them a sort of control over their pricing. As the prime producer of the world's gas supply, this organization is a powerful factor in setting oil price and its variations.

2. Laws of the country or state - Another factor that makes oil prices in countries different, are the laws and rules of your country or state. The government regulates many human activities that will in turn affect oil pricing.

3. Taxes - Gas is a product that is subject to taxes. Hence, the use and consumption of oil is also affected by the taxes imposed upon its use. When the taxes imposed are high, the price of oil tends to go up as a consequence.

4. Price and availability of crude oil - Gas and other products are derived from crude oil that can only be extracted from fossil fuels deep within the earth. This process requires complicated and sophisticated tools to drill them from under several feet of the deepest parts of the earth.

5. Demand - Special occasions like holidays and other festivals drive people to be on the road. Many people will be up and about conducting a range of busy activities. This makes oil consumption and demand rise to a great extent. This increased demand could also produce a rise in oil prices.

6. Other parties necessary in Oil Production and Distribution - Several businesses and sectors take care of different tasks before you finally get to use oil. The end product has passed through many different people, from production to transport, up to the final gas retailers that are usually encountered by the end consumers. These people will also add prices to the oil to give as a salary and profit to the people involved in the production and transfer of the end product or gas.

Knowing the factors affecting oil price fluctuations puts us in a better position to view the current situation. With a little knowledge on the factors that determine oil prices, you can now understand why the price of oil fluctuates and varies among different states and places.

by: Tom Jones

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