why does fuel prices go up n price?

Question

here in malta the fuel price goes up from time to time. i know that we need from other countries maybe that's it but i think there are other reasons .

Answer 1

For any other industry besides oil it's called Price Gouging. Raising the price just because demand increases, like raising the price of bottled water along an evacuation route DURING the evacuation. There is nothing wrong with companies making profit. That's what business is all about. But, to show an increase in profits while claiming the increase in the price is to rebuild their lost refineries??? I would expect to see the refineries being rebuilt while profits remain the same.

Answer 2

Global war conflicts, a decreasing US dollar value, weather such as hurricanes, company mergers, global politics, increasing demand from other countries such as China, maintenance repairs/shutdowns at refineries, increased environmental regulations, oil speculation on the commodities exchange, colder winter weather, increased driving across the US such as holidays, and the list goes on and on.

Basically big oil companies will use any means and excuse they can to make gas prices go up. If it's not one thing it is something else. I think they even use a little psychology to allow them to keep rising it at a steep rate. They raise it up then lower it back down. When I looked at how the prices increased several months ago they raised it almost to a T at 5 cents per month. They'd raise it up then drop it back down then raise it back up, then drop it again. But each month a steady increase of 5 cents. It's a method of conditioning people to accept higher prices. Raise the price up high then drop it back down and people are like "well at least it wasn't where it was a couple weeks ago." Then they raise it back up again. Then when they drop it back down next time its a few cents more than the last time they dropped it down.

Their goal as is any company's is to make more money. Their best way of doing that is to figure out how to raise gas prices without raising it so much that people start using less fuel or start writing to their congressmen a bunch in outrage (that could backfire on them). So they merge and reduce the number of refineries and decrease excess capacity that they have, increasing the likelihood of gas shortages while at the same time reducing the amount of competition their is, limiting the sale and refinery of oil to just a few big oil companies. Back in the 70's the refineries were running at about 70-75% capacity. Now they are running at about 90-95% capacity. That's a slim margin. Not a single new refinery has been built in the US since the 1970's. That wasn't done by accident. By having that slim of a margin of capacity it helps them keep gas prices higher while at the same time not having to spend money on building new facilities. What do you know, a double-bonus for them!

Answer 3

All the answers I read are good, especially those that said "greed" is the culprit.

Another reason mentioned is "scarcity",
In 2006, the production rate of oil was still increasing but at such a slow rate (nearly flat) that the rate of world population increase was higher than the increase in oil production rate, which means, in a per-person basis, the Per Capita Oil Production Rate Peak, was reached in 2006.
From then on, oil prices are dictated by greed.

This means, people will have to move closer to where they work to keep up with Food Price Inflation. Food prices will go up at the same, or higher, rate than the increase in gasoline prices.
The cost of electricity will make hot and humid places uneconomical for some labor intensive industries.

Places at a high altitude will have, a temporary, advantage, until the price of transporting EVERYTHING, except beef, goes up even faster the price of gasoline (there is a compounding effect). The problem is that climbing uses more fuel than horizontal travel and prices will be more affected by that.

In time, places by the ocean shore, with a cooling breeze at night and possibly lower transportation costs, will thrive while living under a threat of flood by increasing ocean sea level..

Places from Santa Cruz to Monterey, in California, will greatly increase in population density and, no doubt, passenger train traffic will become the most practical transportation mode.

Islands in the Mediterranean Sea will remain viable, as long as the oil-producing, Arab, nations wish to remain friends.

This bad situation will not alter Global Warming because cut backs on gasoline use will only bring reduction in oil prices and oil use will go right back up.
In this case, Greed could be an ally, the faster gasoline princes go up, the more renewable energy we will use (it will be, relative to oil, cheaper) but, it may happen so slow that we will only make Global Warming even worse.

Answer 4

It's simple supply and demand. Since our refining capacity is limited, if price does not go up, then there will be shortages. Much like what was experienced after Katrina took out a few refineries in the Gulf.

Basically government policies and practices of oil companies have artificially limited our supply. The United States hasn't built a new refinery since I believe the 80's. Couple that with older refineries being shut down due to not meeting environmental standards set by the government and you have the recipe for higher gas prices.

Answer 5

This has been gone over many many times.

1. Refining capacity is stretched thin every spring as they change from winter to summer blends of gasoline AND they perform maintenance that cannot be done in the summer because so many refineries are in the South.
2. The summer blend is slightly higher in cost. That is why fuel is more expensive in the summer, not because demand is higher.

There are other factors that effect the cost of gasoline. States that mix gasoline with ethanol to make "gasohol" are adding somewhere around 6 to 8 cents per gallon to the cost. Did you know they are also given a waiver to the vapor pressure requirement of the Clean Air Act when they mix ethanol with the gasoline as well?

Refiners are adding capacity to existing refineries, but that doesn't keep up with our demand. So when our inventories start to plummet, we must attract foreign refined gasoline. With the value of the dollar going down, we must raise the price of gasoline higher and higher to attract these imports.

Refiners could build another refinery, but with all the push toward ethanol and alternative fuels, they wonder if they can make back the investment ever (it takes decades to make a profit on an investment that size).

The price of crude does affect gasoline prices, but it is a minor reason in recent history in the US. But it still does have an effect.

Answer 6

Not sure about Malta, but in the US, refining capability is woefully inadequate. We haven't built a single new plant since the 1970's! Of COURSE that's going to play havoc with supply, which makes it vulnerable to high prices when demand rises.

Answer 7

In economics class you will learn. It is called Supply and Demand.

When you have a lot of something (like Oil 30 years ago) then there is enough of it for all the people that want it so the prices are low. But when you dont have a lot of something (like Oil now) those same people who got it before cannot get it so you have to raise the price so that not as many people get it. (because you have less) Thats not exactly right but oh well...

Answer 8

#1 When oil goes up in price, so will fuel prices.
what caused oil to go up in price?
Speculative trading.
Everytime something occurs in the world, such as War near oil wells, bombs on wells, troops geting killed, Isreal bombing somone, terrorists killing a bunch of people, strategic reserves ordered to be filled, speculative traders infer that it may cause a delay in oil getting from the ground to the refiner. they buy it up, hoping to make a profit when it does jump in price. All this buying, makes it appear that demand has gone up, and in iteself pushes the prices of oil up.

#2 refining capacity
All the while #1 is occuring, refining capacity is reaching it limit. So closing down refineries for maintanence, or buying smaller ones up to close them, pinches supply driving the value up, and increasing profit margins for refiners.
Since there is no economic incentive for refiners to boost supply, resulting in lowering their profit margins, they blame the shortage on environmentalists for no new refineries being built, when they have shut several down.

#3 while supply is being pinched by refining capacity reaching its limit, certain times, when demand is higher have a worse effect on the price of fuel driving it up even more. These will be situations such as summer driving, winter heating, and other normal market factors, increase demand on an already pinch supply.

#4 Election time. It was found out a long time ago, that Americans vote with their wallets. When gas prices are real high, results end up being bleak for the administration that controls the executive offices. When they are low, the economy benefits, and improves American views of that administration, that translates to better views of their party.
So typically refiners will increase supply for a short time around election time, or declare a major oil discovery to quell the effects of speculative trading, in order to make things more favorable for parties they support.

Answer 9

Fuel prices rise due to the price of crude oil, which is set by OPEC the countries that produce oil, Also your own country will at tax to fuel to increase its own revenue...

Answer 10

Because apparently they want the rest of the country to be poor. Plus why is energy effiecent things more expensive than other things? They want us to use these environmently friendly things yet we cant ever afford it because its soooo expensive! Stupid government. Dont you agree?