Oil Price Fluctuations: Market or Mystery

Written By: The WealthCycles Staff

U.S. drivers faced the highest Labor Day holiday gas prices in history, according to AAA, with the U.S. average for a gallon of gas at $3.80 on Monday. While not everyone is aware when the price of a barrel of crude rises and falls, almost all of us notice when the price of gas at the pump goes up and down—it’s posted in black and white for everyone to see, and it has an immediate, up-close-and-personal impact on the credit card or wallet. But just about everyone scratches his or her head at the mysterious forces behind those rising or falling prices. What makes it go up? What makes it go down? Why does it often shoot up quickly, then take it’s slow, sweet time falling. The question of oil price fluctuation is one about which almost everyone in the world, and certainly everyone in the U.S., has an opinion. Some believe it is a question of outside forces with hidden agendas; others that it is a strictly economic issue based on fundamentals of supply and demand.Photo Credit: NOAA/NASA SatelliteMost recently, both human error and natural disasters have played a role in oil prices. Hurricane Isaac not only came close to derailing the Republic National Convention in Tampa, Florida, last week. Issac also shut down Gulf Coast refineries and caused the biggest one-day jump in gasoline prices in the past 18 months, according to an August 31 Fox News report. Photo Credit: NOAAIsaac is said to have caused Gulf

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testiomials Crude oil prices make up about 66% of the price of gasoline; other components are refinery costs, distribution, taxes and corporate profits. It is clear that there is not a 1-1 relationship between oil price increases and increases at the pump.”

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