In May 2008, gas prices in the United States passed $3.80 a gallon, shattering records. But this was nothing new to American consumers. The price of gas had been rising, and breaking records, for months, and there is no more Lowest Gas Prices.
Gasoline is the bloodline that keeps America moving, and tracking prices to find the lowest gas price can feel like a roller coaster ride. They’re down a little one month, up the next, and then they shoot up more than 50 percent in a year. Plus, they’re different depending on where you look. Other countries — and even other states and cities — can have very different gas prices from your local Gas-N-Go. To the average person, it probably seems as though there’s little rhyme or reason to how gas prices are determined. So what are the forces that impact the price of gas at the pump, and where does your gas money actually go?
Americans have an insatiable thirst for gasoline. Just look at the amount of traffic on roads and highways, and you’ll see that a severe gas shortage would practically cripple the United States. Americans drive nearly 3 trillion miles per year, according to the Motor and Equipment Manufacturer’s Association, which is the equivalent of about 820 trips from the Sun to Pluto and back.
The United States consumes about 20 million barrels of oil products per day according to the Department of Energy. Of that, almost half is used for motor gasoline. The rest is used for distillate fuel oil, jet fuel, residual fuel and other oils. Each barrel of oil contains 42 gallons (159 L), which yields 19 to 20 gallons (75 L) of gasoline. So, in the United States, something like 178 million gallons of gasoline is consumed every day.
Typically, the demand for gas spikes during the summer, when lots of people go on vacation. Holidays like Memorial Day and the Fourth of July create logjams of tourist traffic during the summer. This high demand usually translates into higher gasoline prices. Cleaner-burning summer-grade fuels, which are more expensive to produce, can increase the price as well, but prices don’t always go up in summer. For instance, while gas prices soared 31 cents in April and early May of 2001, reaching $1.71 per gallon (which seems inexpensive compared to today’s prices), prices actually declined during the 2001 summer.
In 2004, prices continued to rise past the end of the summer travel season for a variety of reasons, including several hurricanes and an increase in the price of crude oil. And in 2005, Hurricane Katrina (along with a sizable increase in crude oil prices) pushed prices to $3.07 per gallon on September 5. Prices settled down somewhat in November and December of 2005. But now the numbers are climbing again, with an average price for regular unleaded gas at $3.95 right now (June 03, 2008), that is an all-time high
Price increases generally occur when the world crude-oil market tightens and lowers inventories.
So as you can see gas prices are crucial to the American way of life and during this present climate of ever rising prices the American population will be doing what they can to find the lowest gas prices to keep the costs as low as possible.
Of course if you were like me you wouldn’t have anything to worry about.
I am financially secure enough to cope with rising gas prices because I work for Its Good Business.
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