How does crude oil prices affect gas prices?
Crude is the product from which gasoline is refined, or made. So, basically, when the cost of production increases (i.e. cost increase in resources), the price will typically increase as well (cost increase in good or service). Not so basically, the gas and oil markets are about the most unpredictable and unstable markets for anything. Basic economic theory says that there are determinants of both supply and demand. (cost of resource is a determinant of supply) Many other factors play into the increase in oil and gas prices; future expectations, production capability, market trends, policy, technology, oligopolistic competition, etc. You can pretty much bet that if a penguin passes gas on Antartica, the price of gas will go up.
