Over the previous yr, retail prices of gasoline and heating oil have elevated by nearly 50 cents per gallon. Diesel fuel prices have elevated by more than 50 cents per gallon. One major cause of these dramatic increases in oil costs is the rising worth of crude oil. In the United States, various kinds of crude oil are priced by utilizing the value of West Texas Intermediate (WTI) crude oil as the benchmark. In early 2005, WTI costs were barely above $forty two a barrel, however by September 2005, they had been at $70 a barrel. Oil prices have decreased then by a few dollars a barrel, however are nonetheless at traditionally excessive ranges.
There are several elements which have contributed to the high oil costs we’re experiencing right this moment. The US accounts for between one fifth and one quarter of the world’s total oil consumption. With oil consumption steadily increasing in 2005, oil provides were stretched and wholesalers bid larger to safe adequate volumes. During the same period, the value of the US dollar fell against the euro, additional driving up the price of crude oil, which is traded in dollars. The conflict in Iraq additionally resulted in a sporadic oil provide from one of many world’s most necessary oil-producing international locations. Lastly, the harm to oil producing and refining infrastructure in the Gulf of Mexico and Gulf Coast space throughout Hurricane Katrina struck a important blow to US crude oil production capability.
Excessive crude oil prices get passed on to the patron within the kind of upper gasoline prices. The price of crude oil includes almost 50 percent of the price of a gallon of gasoline. The cost of refining crude oil and revenue margins of oil firms account for roughly 20 p.c. Distribution, promotion and retailer prices and earnings account for about 10 p.c of the associated fee. The remaining price of gasoline comes from federal, state and county gasoline taxes.
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