Why are gas prices going down?

For something that affects so many Americans, it doesn’t seem to understand how gas prices actually work. Strange conspiracy theory And the anger that floats freely is rampant in small stories, Blame everyone from To the president Greedy oil company executivess to consumers themselves..It should be Someone’s hindrance.

But IDespite n “I did it” sticker on your local petrol pumpThe price of gas has not been determined by the president, price-fixing super-capitalist, China, or the gloomy conspiracy of reverse vampires.It is a function of almost all supply and demand and is a stronger force than both Ils.Luminati and the President Combined management.

What determines the price of a gallon of gasoline?

The price you pay for gasoline is largely determined by the price of crude oil. According to the American Petroleum Institute, about 60% of the price of a gallon of gas comes from the price of crude oil. (The remaining 40% is a mixture of purification costs [18%]Federal and state taxes [12%], And distribution and marketing costs. ) Fluctuation Gas prices account for more than 90% of fluctuations in crude oil prices over the last two years. That is, crude oil is expensive or cheap, so gas is expensive or cheap.

So what affects the price of crude oil?

There are other smaller factors that determine the price of crude oil, but the main factors in that price are supply and demand. Prices are determined by product availability and people’s willingness to buy.This is the reason The 1956 Fender Stratocaster is worth $ 22,000 While Gary Basswood costs less than $ 90..

So why did the price of gasoline soar?

In 2020, when COVID was the first hit, oil demand fell sharply as so many people around the world stopped driving and traveling... Oil and gas prices fell because oil was well supplied and there was little demand.Sometimes below zero $ 1 barrel.Oil producers quickly reduced production in response to lack of demand They didn’t want to sell oil at such a low price.

Demand for oil increased as “normal life” revived and people began traveling and commuting again. Oil demand in the United States.S. Demand rose rapidly to pre-pandemic levels in 2022, but increasing gasoline production takes more time than just time. I want more gasoline. Some of this is practical — it takes time to reopen wells and refineries — but some of it is not. Oil companies and oil-producing countries are taking a strategic approach to crude oil production. If you have too much oil, the price will go down, and if the price goes down too much, you don’t want to get stuck in selling cheap oil.

Then there was a war between Russia and Ukraine. Russia, top oil-The country of origin has been approved by the United States.S. And E.U., Further reduce the world’s oil supply. It all led to our current situation: low supply of pumps, high demand and high prices.

Why are gas prices going down now?

Prices have fallen from their monumental highs in June for several reasons. First, oil suppliers and refiners reopened wells a few months ago to increase refining. And now the oil is starting to hit the supply base. The second is due to global inflation, partly driven by oil prices. The value of money is low, but Therefore, everything is more expensive. Third, the market predicts a future slowdown.

Although the price of gas is ultimately supply-When-Demand, which is also determined by forecasts of future prices for crude oil, is the gas futures market Steady decline from June 8 highs..that is mainly Recession —dWith oil Futures are less valuable because if the economy as a whole is sluggish, gas can fall, and if it sells cheaply, it doesn’t want to be caught in large quantities of oil. Consumer gas prices lag the futures market by about three days.

What can the government do about gasoline prices?

As much as tending to blame high gasoline prices for federal actions (or omissions)About 64% of Americans believe the president has at least some control over gas prices), There is really nothing the president can do to directly control the price of gasoline in the short term.The president doesn’t have a “price down” button on his desk — he (and everyone) mostly Supply and demand.

The president can (and has) Emitting oil from US strategic oil reservesTo oil producers and refiners Increase production, stop being greedy, When Proposing a 3-month gas tax “Holiday”.. But the price of gas wasn’t For real Supply will increase and will begin to decline until future markets begin to decline. Similarly, at the end of the Trump administration, gas was very cheap, not because of what the government did or did nothing, but because of a sudden drop in demand due to a pandemic.

Sure, oil companies are greedy, but there are no signs that they are more greedy than they were ten years ago. It’s easy (and fun) to point your finger at Exxon’s head and say, “It’s cheap, I hate you.” However, a fictitious Exxon CEO who decides to provide gas for free violates a law designed to protect shareholders. Companies have a legal obligation to make a profit (or “greedy” if they want to look that way).

How much will the price of gas go down?

There is no way for anyone to know how long or how much gas prices will go down. A lot of things can affect both supply and demand.Hurricanes can destroy refineries and Thanos can destroy half of the world If it doesn’t exist Cut There is an immediate 50% demand, but like Patrick DeHaan GasBuddy’s Head of Oil Analysis, Pointed out: Unexpectedly, gas prices could drop by a gallon or two cents daily for the next few weeks, with an average cost per gallon of around $ 4.25 per gallon.id August.