Just imagine a place without fuel supply. Most people are forced to walk going to work or to other places. Factories or big industries are nowhere to be found. Development of the place is slow or probably stagnant. This only shows that a bulk of the percentage of energy consumed almost everywhere around the world is fuel. It is mainly used in vehicles and manufacturing or industrial machines. It has become part of our needs, at least for the next years to come. And because of this, it seems we do not have a choice but to pay for whatever it cost. Comparing the prices of fuel ten years ago, you will definitely see the dramatic increase in prices. There are several reasons why fuel prices rise and mostly it is due to the economic view of the relation of the demand and the supply. To dwell more on this, below are some reasons of the increase in fuel prices.
- Every summer, prices of gasoline usually rise. One of its reasons is the greater demand of fuel during this season. Because of good weather, people tend to go out and drive more. Having seasonal demand such as this causes fuel prices to increase since supply remains the same.
- Refineries close down every time they have their maintenance, which is usually during spring. Whenever this happens, supply of oil becomes limited and stretched. This then results to price increase.
- Natural disasters, such as hurricane, can lead to disruption of the transport of gasoline or damages to refineries. Such occurrences again lead to the rise of oil prices considering the inadequate supply.
- Cost of crude oil changes and this greatly affects the prices in the retail market. The worldwide supply and demand of oil are the main drivers of these changes. There are several factors that cause crude oil to fluctuate. Organization of Petroleum Exporting Countries or OPEC consists of members that are considered the large contributors of oil in the world, which then poses a huge impact on the prices. Whenever the organization cuts production due to whatever reason, like turmoil in countries part of OPEC or damages in any of their infrastructures that help in production or transport, supply of oil all over the world is significantly reduced. But having the same or even higher demand in the market will reasonably result to price increase of gasoline.
- Environmental programs for specific states are also a significant factor in the rise of oil prices. With the goal to reduce smog and pollution, different fuel additives are used. And this reformulated fuel is way more expensive to produce, thus having higher prices.