subject: Reasons Why Gas Price Get Expensive [print this page] The price for gas in most countries typically costs four dollars per gallon. Most companies selling oil gain hundred billion dollars every year. Most people would like to know the answer to the question, why is gas so expensive. Gas stations that operate everyday have a complex process of doing their transactions before they can even serve cars.
1. The first answer to the question why is gas so expensive is because of the three markets that can direct their prices namely, spot, contract and futures. These markets have an impact on the rate of gas while it is being produced. The companies selling oil talks to many dealers or refiners by having them sign a contract that would determine the rate of oil. Most of the refiners also think of how they can fulfill their contracts by charging premiums for the oil. The spot market on the other hand sells the spare barrels left by the contracts market. They also add more to the price to earn a profit. The futures market is the one that affects the price of the oil the most among all the three markets. They can dictate the price of the one thousand barrels even in a span of seven years.
2. The second answer to the question why is gas so expensive is because of the price dictated by the refineries. Refineries before were also controlled by the oil companies because they own it however today most refineries are private companies. The refineries are interested only in supplying a certain number of barrels of oil that would make them remain on the profitable advantage of the industry. The prices that come from refineries are called "rack price".
3. The third answer to the question why is gas so expensive is because branded oils from large companies like Exxon-Mobile costs more than those that are sold by smaller players. The brand already has a premium amount since consumers usually connect it to having good quality. This premium is how many executives in an oil company earn so much. Branded gasoline oils also cost so much because of the advertising they need to make to promote the product.
4. The fourth answer to the question why is gas so expensive is because of the sharing of price information among the refiners. This activity was called collusion by the Supreme Court in the United States. They banned it and called it an illegal activity. Today refiners share their rack prices with one another by very discreet ways of communication.
