Skip to main content

Anyone who drives a vehicle knows that fuel prices change. Price fluctuations can happen within a short period of time and are known to be significant. Supply and demand and the differences between regions are common reasons for fuel prices to change. The Organization of the Petroleum Exporting Countries (OPEC) can also cause fuel prices to change.

Fuel prices change due to supply and demand

The single biggest factor affecting fuel prices are current crude oil inventories. If inventories dip, the price of gas will increase. If crude oil inventories are abundant, prices tend to stay down.

Inventories within the United States are heavily dependent on foreign oil supplies. In June 2014, for example, the United States imported almost 9 million barrels of oil and petroleum products every day. That is down from 13 million in June 2008.

Demand for fuel starts to increase as summer approaches. As people start going on summer vacations, more vehicles are out on the road, which drives up gasoline prices.

During the early spring, there can be a shortage of fuel available when the refineries are transitioning between winter and summer products. This transition time causes available fuel levels to drop and prices to increase.

When hurricanes and other natural disasters occur, refinery production can be halted. Fuel prices often increase significantly for several weeks after production has been stopped.

Differences between regions and states change fuel prices

If you live in Los Angeles or New York City, the price of fuel is higher than someone living in Dallas or New Orleans. This difference is because the Gulf States are closer to the refineries that produce gasoline. The proximity of a location to a refinery means it costs less to transport the fuel to stations where consumers pump gas, decreasing fuel prices.

Different parts of the country require different gas formulations. For example, during the winter, some parts of the country use an oxygenated gas that helps to lower carbon monoxide production. Another example, is the cleaner burning gas that is required in some areas with high levels of smog, like Southern California and Dallas, Texas. These special formulations come only from certain refineries, which means there is less supply available.

Taxes make up the biggest difference in prices around the United States. The federal government charges 18.4 cents per gallon of taxes for regular gas and 24.4 cents per gallon for diesel. On top of the federal taxes, all the states add their own fuel taxes as well.

Organization of the Petroleum Exporting Countries (OPEC) can help change fuel prices

OPEC is an organization of several oil-producing nations that uses its power to exert control over crude oil inventories and fuel prices. Twelve nations from the Middle East, Africa, and South America currently make up OPEC. To be a part of OPEC, each country must export more oil than it consumes internally. By controlling the amount of oil each member nation produces, OPEC can influence crude oil inventories and the price of gas globally.

If you need wholesale fuel, contact us here at Kendrick Oil. We provide high-quality fuel products throughout Texas, New Mexico, Oklahoma, Kansas, Colorado and Louisiana. Give us a call at 1(800) 299-3991 or Contact Us by email for information about our products and services