Gas And Oil Are Like “Peanut Butter And Jelly”
Many of you may notice gasoline prices are always increasing and decreasing. One of the main causes for the gasoline fluctuations is crude oil.
Back in 2008 the average barrel of crude oil was over $147.27 Gasoline was around $4 per gallon, and in many states, in the U.S. it was about $5 per gallon. Why were gas prices so high?
Crude oil makes up about 71% of gasoline’s price because it’s one of its main components. When the price of crude oil goes down expect the price of gasoline to drop. When they go up expect a price increase. Right now oil prices are under $50 per barrel which explains why gas is around $2 per gallon and lower in many regions in the United States.
OPEC
The Organization Of The Petroleum Exporting Countries also known as OPEC is a group of 14 of the world’s major oil distributors. Six of the biggest oil countries are in the middle east. OPEC controls close to 80% of oil reserve and about 45% of the world’s oil production.
Wars And Weather
Wars and conflicts with countries affiliated with OPEC can majorly affect the price of crude oil. You will notice many of the oil companies listed on the stock market will plunge when the price of crude oil drops. In 2003 OPEC denoted the United States during the Iraq Invasion. This caused a short supply of crude oil, and a higher demand throughout the years caused prices to steadily increase along with gasoline prices. Weather is another external factor that can cause oil prices to fluctuate.
Power plants burn natural gas, coal and crude oil to generate electricity. During the winter houses use more energy to maintain comfortable living temperatures, which will increase the demand for crude oil and its price. Many roads can be blocked by hurricane floods or snowy weather, limiting the transportation of oil.
Crude oil has a freezing temperature of around -40 and -60 degrees Fahrenheit. Freezing temperatures in northern states can cause an inadequate and less efficient production of crude oil, increasing demand, and price.
Thank you for reading! I will be posting some strategies on how to trade crude oil stocks!