Compare Crude Oil Vs Gas Prices
When you compare crude oil and gas prices, it goes without saying that there is a link between the two. This is because gas is produced from crude oil, and when crude oil price increases, even gas price increases. However, there are other factors that have an effect on the price of gas. |
There is a big different between the cost of a gallon of crude oil and that of a gallon of gas. The price of one gallon of gas is more than that of one gallon of crude oil. Between the years 2000 and 2008, the price of crude oil made up around fifty-one percent of the price of gas. However, in the year 2008, when there was a perceived shortage of crude oil, the price of oil made up a whopping sixty-nine percent of the price of gas. (See Reference 1)
The other factors that have an effect on the price of gas include taxes imposed by the federal and local government, refining, transportation as well as marketing of the gas. The remaining cost of gas comprises these costs. Along with the price of crude oil the other factor that makes up major portion of gas is the tax. (See Reference 1)
When there is a shortage of crude oil, it has a direct effect on the price of gas. In the 1970s when wars were being fought in the Middle East, the price of crude oil tripled and this caused the price of gas to nearly double. Another example is the gas price on 7th July 2008 in the US. On that particular day, the average price of gas was $4.04 for a gallon, and on that day, the cost of crude oil was around $95 for each barrel. (See Reference 1)
Nearly forty percent of the world's crude oil is produced by OPEC group of companies that have sixty-seven percent of the world's oil reserves. This group is responsible for setting the price of crude oil and as a result they are also responsible for setting the price of gas. (See Reference 1)
As the US is the world's largest consumer and importer of crude oil, any changes in the crude oil and gas prices have a direct effect on the country's consumers. When more crude oil is produced, then gas prices tend to get lower. Also, when the demand for gas increases, it causes a rise in the gas prices. This is primarily because the suppliers are unable to meet the increased demand. (See Reference 2)
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Compare Crude Oil Vs Gas Prices
The history of oil futures trading in the US began in the year 1978 with the trading of heating oil futures in the New York Mercantile Exchange. This was the first energy related commodity to use in futures trading. Thereafter, crude oil futures trading began in the year 1983 followed by unleaded gas futures in the year 1984.