Most everyone is concerned about the price of gas. Back in 2011, paying at the pump was more of a pain than pleasure because the average price of a gallon of gas was well over four dollars. Although prices have come down tremendously since then, this does not mean spikes will not occur in the future. It is important consumers are aware of how crude oil prices affect the price of a gallon of gas. This will allow a person to stay abreast of the potential for rising gas prices so they can stay prepared.

According to oil experts, the price of crude oil is responsible for about 71% of the price of a gallon of gas. The price of crude oil is primarily determined by OPEC and is based on supply and demand. Often, OPEC intentionally increases or decreases production so they can govern the current price of oil. When demand is high and supply is low, the price of a barrel of oil is going to be increased. This price increase is sure to affect the consumer at the pump.

According to the Department of Energy, Americans alone consume around 178 million gallons of gasoline on a daily basis. This accounts for around 20 million barrels of oil each day. These astronomical numbers do not even account for the rest of the world’s gasoline consumption. With such a great need for gasoline, it is no wonder the oil market can become stressed, causing an increase in gasoline prices.

Other factors that increase gasoline prices are:

  • The cost of refinery operations
  • Taxes
  • The cost of distribution

Since 2008, the price of gasoline has been greatly determined by the futures contract ups and downs in the market. Traders basically determine the future cost of oil and agree to purchase at a set price in the future. The cost of gasoline also is greatly affected by the value of the dollar.

If you are interested in learning more about gasoline prices, it is imperative you stay abreast of the latest oil prices so you can successfully predict the coming costs of a gallon of gasoline. Knowing this information can help you as a consumer.