With fuel prices reaching alarming levels, more and more people would want to be aware of what are the reasons affecting and influencing the price increases. Gasoline prices might not be set in as a easy manner as just any other product. You will find particular components that, when affected can help give rise to gasoline prices. Here are these components:
Crude Oil Gasoline comes from crude oil. A bulk of the crude oil provide for the global marketplace is located in the Middle East. This region accounts for about forty percent of the world’s supply of crude oil. And in this region has an established organization known as OPEC (Organization of Petroleum Exporting Countries) that sets the cost of crude oil produced by their member countries. The OPEC also sets the rate of production at which every member countries should try to come up with periodically in order to set up a stable enough supply according to demand.
Refining Price of crude oil is set on a per barrel basis. One barrel of crude oil contains 42 gallons which is then refined to become fuel. Every barrel of crude oil then yields approximately 19.6 gallons of gasoline. Remaining yields include distillate fuel oil, residual fuel oil, jet fuel, and other items. The refining procedure might also affect the price from the end product.
The price of oil in the world market is based mainly on demand for it. When there is an increasing demand for gasoline in many parts of the world, particularly within the United States, crude oil costs tend to go up. The price of crude oil might also be impacted by political happenings in some major locations of the world. Local conflicts especially in various oil producing countries which may have an impact in the world supply of crude oil might also have an effect on its cost.
Distribution and Marketing The distribution process that goes with providing the crude oil from suppliers to refineries that make it into gasoline down to the retailers who sell it to consumers can have a substantial impact on gasoline prices. By average, distribution accounts for about ten percent of the fuel price. Distribution goes into a long procedure from crude oil to the end item, which makes it one from the more essential components that affect gasoline prices.
The distribution process generally starts from an oil producing country shipping the crude oil to several refineries overseas. The refineries then carry the gasoline into a series of pipelines inland that lead to several of the main consumer areas. It is right here that the fuel may also be further blended or refined to match certain local regulations. The finished item may then be delivered to a number of retail outlets where the cost is set based on certain factors such as supply, demand as well as competition.
Taxes Fuel prices may also be impacted by taxes both local and countrywide. The difference within the taxes set for fuel in different locations account also for other places having cheaper gasoline than in other locations. On average, taxes in general account for about ten percent of the cost set for gasoline.
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