What causes gasoline prices to rise and fall so often?
Supply and demand plays a major part in the fluctuation of gasoline prices. When demand is high, the suppliers usually raise the price to make a profit. Consumers do not have the choice of substituting different fuels for gasoline so they are forced to pay whatever the price of gas is. If the supply of gasoline declines unexpectedly due things such as refinery problems or a pipeline break, gasoline inventories (stock) will decline rapidly. When stocks fall dramatically, wholesalers may get scared and bid more money for the product. This in turn raises the overall price of retail gasoline. Another reason for significant price changes is the change in the cost or supply of crude oil. The most recent gasoline price increases are due in part to OPEC crude oil production cuts in 1999. International conflict has also been a factor in years past such as the Persian Gulf conflict and the Iran/Iraq war. Seasonality is also another component of the supply/demand issue. Retail gasoline prices ten
