how are U.S. gas prices effected by foreign oil?

Answer 1

gas price has four components: (1) the cost of the fuel itself, (2) its transportation (3) its processing (4) taxes
the cost of the fuel itself is the biggest factor in the cost and is mostly controlled by OPEC which is a worldwide monopoly of oil exporting countries like russia, mexico, saudi arabia, etc. Basicaly the facts go like this: there is a finite amount of oil in the world, and it is also expensive to extract it out of the ground. Because the supply limited, a few countries that are lucky enough to have oil under their ground can cooperate with each other, fixing the price at which they will sell the oil by regulating the supply. Economics 101, restrict the supply and the price will go up even if the demand stays constant. OPEC does just that, restricting supply at various times to raise prices and make money. Because supply is finite, OPEC will determne the price of oil around the world, which is why the cost of world oil is standardized in an index. Transportation costs dependson where the oil is comming from, so if its comming from the Middle east the cost will be the cost of the tankers transporting them, as well as cost of insurance and other such expenses associated with transportation. Processing is determined by the country that buys the oil. For example in CA the state government determines that certain additives be in the oil, which raises the cost of gas overall. Finally there are taxes, which are usually determined by the states in the US.
Of the 4 costs, the first as I said is the largest. The thing is, because oil is finite in supply, it does not matter whether its foreign or domestic, it just is. It has one price, the world price per barrel. That price is affected by the supply and the demand. The demand comes from all countries, so for example as China's economy grows, they will demand more oil, which will raise prices if supply remans constant. Secondly price will be effected by the supply, which in turn depends on OPEC and the demand.

Answer 2

Most of our oil is from foreign countries; including the ones we are fighting against. They hike up the prices so the government has to pay more, so they pass the price over to Chevron and other gas companies and then to make their money, they increase it again!!!

Answer 3

They are, in a way, substitutes. Thus, when the price of oil increases, more gas is demanded. But as the demand for gas rises, so does the price for gas. So, oil price up, gas prices follow.

Answer 4

we get our oil from them. so if the oil is harder to find, the price will rise but the foreign countries will be willing to supply more. and the demand isn't really affected by price, so they can pretty much price it however they want, because they know that we will still need it

Answer 5

It seem that if foreign oil goes up a dollar a barrel, then the American oil companies jack it up up 5 dollars when it comes ashore in the USA.

Answer 6

Well, you see, it's a simple matter of economics. The U.S. has lots of water and jelly. And foreign countries have lots of oil and peanut butter. As our supplies of water and jelly fluctuate, it becomes worth more or less to other countries. Same goes for the oil and peanut butter. And you know how important it is to have peanut butter and jelly together. So they have the peanut butter and we have the jelly. Something's gotta give.

Answer 7

The situation is caused by the SUPPPLY / DEMAND condition.
The entire world's crude oil supply has "flowed" from one geographical location to the next. - Wherever the supply is closest to the surface gets the most encores. - When the crude oil is closest to the U.S.A. ports, we can more esily access it with less cost.
The GLOBAL perspective comes into play when the supply is more prevalent from foreign ports, giving the overseas providers more clout. Thus, we (U.S.A.) are paying the overseas locales more money because it is THIER petroleum and not ours (U.S.A.'s)

Answer 8

the oil we have in the US is foreign....thats why in one of bush's last speeches he was talking about getting our oil closer so that we could lower gas prices and other prices. we have to get our oil from them.....thats why!

Answer 9

rule 1:
prices will always rise

rule 2:
see rule 1

Answer 10

coz we buy oil from other country too