TEMPLE, Texas — There has been a great deal of talk of gas prices in recent weeks and months. But what really effects gas prices? And what has been happening to drive prices to records at the pumps?
Neil Vannoy has an MBA from Pepperdine University and a Certificate In Financial Planning from Boston University. He's also a contributor to ‘Investing In An Uncertain Economy For Dummies'. He takes politics out of the question and tells us what goes into the price of your gasoline.
"People pay attention to the price of oil since it gets mentioned frequently, but the price of a gallon of gas is made up of four primary costs, " said Vannoy. "The cost of oil is the largest of the four, but you also have to consider the costs of refining, marketing and distribution, and taxes."
Vannoy pointed out Something else that a lot of people don't realize, or weren't aware of telling 6 News, "The price of oil is set in a world market based on supply and demand; it's not controlled by the oil companies."
The laws of supply and demand is a theory that simply explains the interaction between the sellers of a resource and the buyers for that resource. Vannoy described to us in greater detail, "Prices tend to move in the opposite direction of supply and in the same direction as demand. When supply goes down like it has recently due to the war in Ukraine, prices go up. And when demand goes up like it's likely to do as the summer driving season gets started, prices could go up even more."
According to Vannoy, more production in the United States would, of course, lower prices, but the energy policy implemented by an administration seems to be setting the tone for supply.
"More domestic production would help lower the price of oil and gas since it would increase supply, but it would take months or possibly years for new production to affect prices," said Vannoy.
According to CNBC, Americans are spending $1,837 more a year on gas, due to the new inflationary prices. That's 153 dollars a month out of your budget. And that is what has everyone talking!
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