Rising gas prices can impact consumers and the economy in many ways. For example, rising gas prices affect consumers at many places they purchase goods. If the places rely on gas, natural gas, or crude oil:
- The gas pump- it costs more to fill your gas tank
- The grocery store- groceries cost more to grow or produce and transport to the store.
- At home- it costs more for heat and electricity.
Future gas prices depend on several things, such as the cost of crude oil, refinery, operational costs, weather (hurricanes, for example), or geopolitical events. Federal and state taxes can also impact gas prices. Marketing and distribution costs of the gas supplier or gas station- everyone adds their fees to the cost of gas. Changes in any of these factors affect how much consumers will pay at the pump.
Since gas is produced from crude oil, consumers see a direct increase in gas prices each time the cost per barrel of oil increases. Also, worldwide gas consumption can impact prices since most of the world relies on middle-east and African counties for oil.
Understanding how OPEC impacts the cost of oil
The Organization of the Petroleum Exporting Countries (OPEC) works together to price oil according to supply and demand worldwide. At times, based on geopolitical factors or policy changes that impact the use and production of oil. According to OPEC:
“The mission of OPEC is to coordinate and unify the petroleum policies of its Member Countries and ensure the stabilization of oil markets in order to secure an efficient, economic, and regular supply of petroleum to consumers, a steady income to producers, and a fair return on capital for those investing in the petroleum industry.” – OPEC
Where does it Come From
The U.S. Government purchases oil from OPEC member countries to keep in reserves to help offset future oil production declines that may result from increasing oil prices. as a way to buffer the broader economy from high gas prices. While the U.S. has oil production within its borders, the U.S. continues to rely on oil imports from other counties since it isn’t self-sufficient in oil.
Keeping gas prices low helps the economy and consumers by keeping the prices of goods and transportation more affordable. We are still determining what the future gas prices will be. If gas prices impact you, consider driving less, purchasing fewer goods, growing a garden, or cutting down on spending may help your situation.
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