Gasoline has been around for over a century and will continue to stay around for a while. It is used for almost any common motorized machine. Before this gasoline product was patented in Massachusetts back in the 18th century, its very close relatives kerosene and petroleum were commonly used. Currently in today's pandemic gasoline prices have been cheaper and dropping due to a couple of factors that will be discussed in this paper.
The different market structures play a big part in the price and demand of gasoline. Many of the top gasoline producers have a relatively equal price per barrel of gasoline. Thus in the wholesale market, the market is perfectly competitive. Meaning that when one company raises or lowers gasoline prices then the other top competitors must follow suit. This gives gasoline that usual average price that we see every day.
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With gasoline being inelastic too, the prices usually don't get crazy high or crazy low because the demand will always be there unless drastic changes in the demand occur which can play a little factor in the price level. It is a little different from a retail perspective, though. If we are in a global pandemic, which we see right now, it makes demand go a little down because not many people are working and need gasoline, therefore the prices drop. Rather than prices dropping, when demand increased like when we had a big hurricane a couple of years back and everyone was stocking up on gas, the prices were higher than normal.
Not exclusively does an enormous circumstance influence the gas costs, but, a ton of things figure out what the costs will be on an ordinary day. The expense of crude oil is the central supporter of the general augmentation in retail gas costs since the start of 2009. Generally, a $10 increase in oil costs implies a quarter of a dollar increase in retail gas costs. Steep oil costs depend upon a couple of factors including generally speaking effortlessly and solicitation, steadfastness of the scattering association, the estimation of the U.S. dollar, and worth theory.
An article written by a Wiley author talked about how the United States devours more oil and refined items than most other countries on the planet. The interest in unrefined petroleum in China, India, and other creating nations, has ascended with their populaces, expanded exchange, developing inside and business sectors. Creating countries are relied upon to represent about a portion of the worldwide interest by 2015, up from 36 percent in 1996. Expanding requests prompt more significant expenses.
With the demand side briefly being talked about, more towards the supply side now. Some demand factor that can affect gasoline prices could be the season itself. In summer more people are out and driving which makes gasoline prices rise. Not only this but the price of gas also rises during the summer months because it is slightly harder to make gasoline, according to the Energy Information Administration. They also stated that in the first week of February the gas prices are at the usual lowest of the year and mostly get the highest during the week before memorial day.
Economic growth will also be a factor in the demand side of gasoline prices. When the economy is at a low usually people will have less money to spend but this has the least amount of effect because big corporations use a lot of gasoline to work their machines. During economic growth, most companies produce more goods, and this will in turn use more gasoline. The major oil companies will
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