Rise in Gasoline Prices
Now that summer is here, and we have things to do and places to see, it seems that gas prices are on the rise. Gas prices were already high, and now they are topping the charts.
Unfortunately, we can't just blame the high gas prices on those who drill and produce it. Of course we would like to say that this is all about someone making their pocket fatter, but there is a lot more that goes into it than just that.
Summer means more demand.
When winter comes, we all want to get to where we are going quickly and return home to our warm cozy homes. Summer does the complete opposite. We want to get out and go somewhere, do something, especially things we couldn't do in winter.
Vacation time. Everyone who works a normal 9 to 5 and has children will take their vacation time during the summer. The kids are out of school and it is time to spend some quality family time together. No matter what it is that you choose to do for this vacation, you are likely going to be using gasoline to get you there.
Now that we are in need to go somewhere, we have just increased demand. When demand increases, you can always expect prices to increase. Supply of gasoline isn't going to increase any time soon, so again another reason for the prices to go up.
Now if it was only that simple.
We also have to face the fact that the air in the winter is much different than the air in the summer. Summer air combined with pollutants equals smog. It is more noticeable in areas where there is more congestion; but just because you don't see it doesn't mean it isn't there.
The Environmental Protection Agency had mandated in about 1989 that gasoline composition be slightly altered for the summer months. This in turn means that the different composition of gasoline than what is normally produces is going to cost more. The more refining or altering that needs to be done, the more money it is going to cost.
Now what about the plants that refine the gas, does this necessarily affect them? Of course. When it comes time to transition from one blend to the other, the plant needs to shut down to make the appropriate adjustments and then get it back up and running. This cost time and money.
The gas station also feels this crunch. They have to shut down as well to transition to the new gasoline, which means their profits on gasoline have ceased or slowed while they transtition. Again, causing prices to increase.
While the plants and the gas stations are down, they need to pass the burden on to someone else. That someone ends up being you, the consumer.
Not many people understood everything that goes into pricing when it comes to oil and the products that we consume as a result.
While many Americans are wondering whether their family vacation is going to take place this summer, the rise in gasoline prices during the summer is not going to end. It will always happen year after year, no matter what is happening in the gasoline market at home or abroad. Just make the adjustments to your budget at the beginning of the year, and that summer vacation might happen.
