Zebin Dholasaniya

ISM 7
"Gasoline Price Determinants." Gasoline Price Determinants. N.p., n.d. Web. 20 Mar. 2015.
<http://arizonaenergy.org/Analysis/FossilFuels/gasoline_price_determinants.htm>.

The basic costs to produce and deliver gasoline to consumers take into account:
- Cost of crude oil to refiners, refinery processing costs, marketing and
distribution costs, retail station costs, taxes
Feedstock availability
- Rapid gasoline price increases have occurred in response to crude oil
shortages.
- If refiners cannot make money producing gasoline from crude, they will
not buy crude. The price of crude will down until an 'affordable' level for
producing gasoline.
- If the refiners can make profits making gasoline, they will bid heavily for
crude, driving up the price of crude until it no longer makes any sense to
make gasoline.
Supply and Demand
- High demands or supply declines due to refinery production problems or
lagging imports, gasoline inventories may deplete rapidly. When stocks
are low, some wholesalers become concerned that supplies may not be
adequate over the short-term and bid higher for available product, pushing
prices up.
OPEC
- Influences oil prices worldwide because its members produce nearly 40%
of the world's crude oil and hold close to 70% of the world's estimated
crude oil reserves.
Government taxes
- Government taxes account for a considerable component of the retail price
of gasoline.
Specifications changes can also influence product prices
- Changes in specifications may alter the way the product is traded. As
different refineries produce gasoline with different specifications,
consumers may need to seek new sources of gasoline if their current
supplier cannot meet tighter product specifications.
- The US, for example, is in the midst of proceedings to ban the use of
MTBE in gasoline.
- Gasoline specifications govern odor, color, research octane number
density, sulfur content and MTBE content.

This source provides an over-view of the essential factors that drive gasoline and
crude oil prices up and down.