Why Gas Prices Go Up and Down?

money gas pumpGas prices go up and down on a constant manner. You wake up this morning with this rate, and after a little while, it is already different. Furthermore, gas prices vary from one region of the world to another. When you go to the Middle East, gasoline is like a piece of bread that you can buy in a nearby bakeshop for a cheap cost. Well of course, this section of the world is the largest exporters of oil in this sphere of existence. They have oilrigs deployed within massive desserts and islands. And since oil is almost a basic component to life, you can also find the wealthiest in oil-rich countries such as Bahrain, Saudi Arabia, United Arab Emirates and Qatar.

But, can someone predict when gas prices will go up or down? Here are some valuable information.

Gas is a Non-Renewable Energy Resource

When you speak of non-renewable, expect that prices be higher compared to those that people can reuse, renew or recycle. Oil is non-renewable source of energy. True enough, it is one of the most priced commodities in today’s modern world.

The Economics of Oil

Oil has been a stronghold of most economies in the world. As previously mentioned, the more oil you have, the richer you can be. Generally speaking, the gas prices swell if the world crude oil market tightens and lowers inventories. The machineries, transportation system and household of the world are predominantly dependent on gas. Any scarcity in supply would automatically cause increase in value. Surplus, on the other hand, would mean roll back.

Consumption

The demand for oil shoots up during summer when everyone wants to go on vacation and road trips. As the law of supply and demand applies, the higher the demand, the higher the prices can possibly be. Natural calamities can also dictate the pricing of gas. As typhoons or earthquakes affect gas stations, there are less and less suppliers where people can purchase gas. This makes the cost go up inevitably. But philanthropist gas station owners would normally pull down prices to help alleviate the tough times that his or her community is facing.

Related posts: