How low will gas go? Since the 19th century, gas has gradually become a necessity to mankind. It has been used for lighting our houses, to produce heat, to cook our food and to run our vehicles. As time passed, the price of gas has known many changes in Montreal. By the year of 2008 the price was relatively low, but suddenly became very high in 2014. This year in Montreal, the prices are as low as 3.4 US $/G. When considering the previously mentioned facts, we ask ourselves why the price of gas is low and what are the factors fluctuating its price. The main factor responsible of gas price changes is the cost of oil. According to the Business Insider website, two-thirds of the cost of gas is determined by the oil cost and the rest constitutes According to the website of Oil-Price, today’s value for a barrel can be bought at the price of $41.25 this means that oil is not demanded as much as it used to be over the years, because of the awareness of the environment and also because it is a cyclical phenomenon, there’s no actual reason, but the price will eventually rise again. Since oil is used to produce gas, it would come with surprise if the price of gas is low since the oil cost are also low. Gas prices depend on oil costs and oil costs depend on Why is the cost low? For the Canadian citizens it is a good thing because low cost of oil equals low price for gas, therefore the people of this country will have extra money in their pockets: “typical consumers will be saving an average of $25 a week, or $300 in three months” says Elna Cain in her article titled Why Are Gas Prices Low And What Does It Means For Canadians. That being said, other businesses can benefit from the extra amount of cash. In other words, the beneficiaries of this decline of oil prices are not only the citizens, but other business owners as well. The reason why oil prices fluctuates it is because of the law of supply and demand, which states that if the supply is low then the price will be high and if the demand is low then the price would be significantly low, which is the case for gas today. But why is the demand for oil that low? The price of oil has been dropping for over year by now, going from $100 to $40 and the reason behind is that people around the world are more aware of the environment, encouraging think greener, which resulted in creating energy-efficient vehicles decreasing the demand for
Scherer, Ron. "US to Tap Strategic Petroleum Reserve to Drive Gas Prices down." The Christian Science Monitor. The Christian Science Monitor, 23 June 2011. Web. 09 Apr. 2012.
...oline is affected by many different factors. The biggest factor is crude oil, but the supply and demand of crude oil will ultimately determine the price of gasoline. The supply and demand of crude oil and gasoline are also affected by several factors. The price is continually increasing and the supply is becoming harder to produce and deliver. So it seems we, the United States, need to find a way to slow down our fuel consumption and decrease our demand. This may be the only way to bring down the price of gasoline. I know I would not mind, because then I could use the extra $40 to buy a couple more DVDs for the kids to watch while we are running around town in the Expedition.
Then if the price is set to low the demand would increase, lines at gas station would become extremely long and oil companies may not be able to keep up. So if the oil companies cannot keep up than the supply of gas could decrease dramatically which would cause
The modern world of today runs on fossil fuels with crude oil being the live blood of industrialized countries. Though much of the twentieth century old was plentiful easily acquired and low in cost it has only been in the past thirty years that we have seen oil prices rise substantially. This can be attributed to many different reason. These price changes have challenged the industrialized world to become more creative with their techniques of both acquiring oil and using it.
Currently, the most important factor in the rise of gas prices is the increasing cost of crude oil. Unfortunately, the United States has three percent of the world’s oil reserves. (Horsley) In 2009, the United States was third in crude oil production as well as the world’s largest petroleum consumer. (e. I. Administration) Such consumption required and still requires the United States to import petroleum/crude oil from other countries.
The main reason for the price increase is that OPEC (Organization of Petroleum Exporting Countries) has decided to cut back on its oil production. What is the reason for this? Simply stated, OPEC knows that they have the United States under their control in terms of what price they want to sell crude oil to us at, and how much they want to ship. With the present economic prosperity in the U.S., it didn’t take long for OPEC to seize the opportunity to make more money by cutting production of crude oil, and thus forcing consumers to pay more for fuel. Just how much higher are prices you ask? “Crude-oil prices in early March hit $34 a barrel, while a year earlier it was selling for $12 a barrel, which is nearly a 75% price increase since last year. This equates to an additional 48 cents a gallon” (Logistics Management 15).
The thought of rising gas prices is something a person thinks about when summer arrives and it is time to put gas in their vehicle. More people travel in the summer, especially for family vacations, which increases the demand for gasoline. Also, in the summer there are natural disasters that happen, such as hurricanes that will cause a spike in gas price. Gas prices are determined by many factors, and supply and demand are one of those factors. When it comes to gas, gas is something that people want to purchase, and the sellers want to sell.
The price of the crude oil also decrease from $112 a barrel to $108 barrel from 2011-12 to 2012-13.
Oil is an essential resource in the whole world. People use oil in a variety of ways. The world has used oil for many years and it will still use it as a basic commodity. Oil use can be traced back to 1850s. However, when Edwin Drake produced commercially usable quantities of crude oil from a 69-foot well in Pennsylvania in 1859, he marked a new period that considered oil as a valuable commodity. Oil prices have been inconsistent since 1859. The discoveries of more wells considerably lowered oil prices and made some oil barons abandon the industry. However, oil prices have increased over time because of several factors.
The WTI is described as light because of its relatively low density, and sweet because of its low sulfur content (Cite source). The WTI is the underlying commodity of New York Mercantile Exchange 's (NYMEX) oil futures contracts. If we calculated using the current buying power of U.S dollar, i.e. after eliminating the effects of inflation in the past 45 years, from 1970 to 2015, according to the NYMEX, the crude oil price of WTI has moved from 15 to 120 dollars a barrel (Cite source). When recalling the oil prices in the past to predict for the future, we have seen a lot of vicissitudes phrases. From 1974 to 1985, oil prices moved within a range of 50 to 120 dollars per barrel. From 1986 to 2004, for almost 20 years, oil prices range between 20 to 50 dollars per barrel. There are two exceptions for that time frame, however, when the crude oil price raised above 50 dollars ceiling or fall below 20 dollar floor is when Iraq attacked Kuwait in 1990 and when the Russian Federation devaluation its currency in 1998 due to the effect of the economic crisis from the East Asia in 1997. Later, from 2005 to June 2015, oil prices returned to the 1974-1985 range, which is between 50 and 120 dollars
barrel and per gallon has gone up significantly worldwide. The price of oil has already passed
Gas has many effects in our society, and some of these effects have a negative impact in our life. Our daily lives depend on gas, when we go to work, school and going out. We use gas for electricity, cars and many other things. The effects of gas are direct and very affecting in our lives because of the many forms it can be used in. There are many negative effects of rising gas cutting back in vacation time, prices of everything is going up “inflation”, car companies making more efficient cars.
According to Douglas, (2015) low oil prices place strain to African oil exporting countries such as Nigeria while net oil importing countries stand to benefit as costs decline the fuel prices also decline. Although in South Africa it’s much helpful considering Eskom increasing importance of diesel as it struggles to generate enough power to meet demand (Douglas, 2015).
Oil and natural gas production has been exponentially multiplying since 2008, making the United States independent from foreign energy. This is important for the United States economy because in the last century a significant amount of GDP has gone to the importation of Oil and gas, doing so we have become victims of the rise and fall of the volatile prices set by OPEC, driving the United States to economic crisis, as it happened in the 1973 oil crisis where oil prices rose dramatically from $3.00 per barrel to $12.00 per barrel .
The price of oil is one of the most important indicators of the economy. Oil, first and foremost in the energy sector, is used as inputs in various sectors. The impact of oil price changes on stock market has been widely discussed by academic researchers, investors and policy makers. Overall, the aggregate stock returns is positive or negative depends on whether crude oil prices driven by demand or supply shocks in the crude oil market (Kilian and Park, 2009).