Gas prices increase as the price of crude oil, needed to produce petroleum, increases. Crude oil prices are affected by supply relative to both the actual and expected demand for petroleum products.Continue Reading
Fluctuation in the price of crude oil is the largest contributing factor to frequent gas prices changes, even drastic ones. Crude oil is a major global commodity, and the price is set by the current world market. Strong global economic growth can create higher demand for crude oil, causing the price to rise. The price can also increase dramatically when there are major supply interruptions, including natural disasters that may affect the drilling or shipping of oil. Political conflicts in major oil-producing countries, particularly the Middle East, also lead to oil price increases, as fear that the supply could be cut off or limited drives up demand.
Gas prices tend to rise in the summer because summer oil blends are more expensive to produce than winter blends. Different seasonal blends are necessary because of the differences in gas evaporation in varying temperatures. In the United States, planned maintenance at oil refineries can also reduce gas production, which can contribute to rising gas prices if an unexpected shortage or outage occurs.Learn more about Industries