Reasons Gasoline Prices Drop is the article chosen to do research on and review. Other resources were used to ensure accuracy of explanation. This article directly relates to the study of microeconomics with a focus on supply and demand of gasoline. It focuses on several different factors that affect the price, but mainly focuses on the drop in the price of Gasoline. The article was informative but didn’t use many references, so different references and resources had to be used. The article was very simple, to the point and easy to understand and follow. Gasoline is used every day by many people and businesses. The price is constantly changing, rising and falling, due to many different factors. The change in the price of crude oil affects
…show more content…
Crude oil extraction has advanced over the years and is more efficient to produce. A common way of extracting crude oil is by hydraulic fracturing. Hydraulic fracturing is a method of extraction that drills down into rock or shale, and pumps in a high pressure liquid, often water. The pumping in of the liquid into the rock separates the crude oil from the rock or shale and helps push it to the top for easier extraction. With newer advancements in this technology, the US is producing more crude oil every year, making them less reliable on foreign oil sources (Kahn, n.d.) Even though the United States is producing more oil and relying less on foreign oil sources, the market for gasoline and its prices is ever changing as well. With other countries competing in the price of their oil, the overall price of crude oil has …show more content…
Cars are becoming more fuel efficient and relying on other energy sources to run (Krauss, 2015). With those cars using less gasoline and people being more conscious of the environment, there has been a drop in the demand for gasoline. Just as price changes frequently with gas, the demand also changes throughout the year as well. People tend to use more gasoline during the summer months, where they vacation more and go on more road trips. As the seasons of fall and winter approach, the demand for gasoline tends to drop. People tend to drive less in the winter and take less long road trips. During the winter months, gasoline prices are lower due to gasoline being mixed with other things such as butane (Frank, 2012). Since butane is cheaper than gasoline, and the gasoline is being cut with it, it lowers the price to produce the winter blend. Lowering the cost in production helps increase supply, which in turn reduces the price of the
Crude oil extraction has advanced over the years and is more efficient to produce. A common way of extracting crude oil is by hydraulic fracturing. Hydraulic fracturing is a method of extraction that drills down into rock or shale, and pumps in a high pressure liquid, often water. The pumping in of the liquid into the rock separates the crude oil from the rock or shale and helps push it to the top for easier extraction. With newer advancements in this technology, the US is producing more crude oil every year, making them less reliable on foreign oil sources (Kahn, n.d.) Even though the United States is producing more oil and relying less on foreign oil sources, the market for gasoline and its prices is ever changing as well. With other countries competing in the price of their oil, the overall price of crude oil has …show more content…
Cars are becoming more fuel efficient and relying on other energy sources to run (Krauss, 2015). With those cars using less gasoline and people being more conscious of the environment, there has been a drop in the demand for gasoline. Just as price changes frequently with gas, the demand also changes throughout the year as well. People tend to use more gasoline during the summer months, where they vacation more and go on more road trips. As the seasons of fall and winter approach, the demand for gasoline tends to drop. People tend to drive less in the winter and take less long road trips. During the winter months, gasoline prices are lower due to gasoline being mixed with other things such as butane (Frank, 2012). Since butane is cheaper than gasoline, and the gasoline is being cut with it, it lowers the price to produce the winter blend. Lowering the cost in production helps increase supply, which in turn reduces the price of the