When gas prices go high

July 22, 2008 | By travs |

The American economy is in a bad way right now. The Consumer Price Index (CPI), which measures prices in terms of consumer goods, rose 1.1% in the month of June alone, representing an annualized rate of 13%. Gas prices are up.

EIA analysis of the petroleum market points to the cost of crude oil as the main contributor to the record high gasoline prices that we are now experiencing.

The cost of crude oil now accounts for about 73% of the gasoline pump price. World crude oil prices are at record highs due mainly to high worldwide oil demand relative to supply. Other contributing factors include political events and conflicts in some major oil producing regions, as well as other factors.
Besides that, gasoline prices in the United States typically increase during the spring and summer due to seasonal increase in demand and the additional cost of producing summer-grade “reformulated” gasoline required to meet air quality standards in many urban areas.

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