What really makes gas prices go up and down?

Gas prices fell drastically to $1.99/gallon yesterday, and jumped back up $2.13/gallon today. What the hell really makes gas prices flucuate, or do gas stations just set their own prices depending on how much they think we will pay?

What's driving gas prices higher? The cost of crude oil, which has doubled in the past two years to more than $70 per barrel, is the largest component in the price of gasoline.

This increase -- caused most recently by supply disruptions in the Gulf of Mexico and Nigeria -- is the main reason gasoline prices have climbed from $1.80 per gallon to almost $3 per gallon since 2004.

However, crude oil prices are not the only factor driving fuel prices. United States refineries do not have enough capacity to meet the country's demand for gasoline and other fuels. This makes what they do more valuable in the eyes of traders who buy and sell fuels on commodities markets. When traders are willing to pay more, higher prices eventually reach the pump.

Several specific factors combined to cause traders to bid up the price of gasoline since early March: Heavier-than-usual maintenance at refineries has reduced supplies, the implementation of tighter sulfur regulations on gasoline and diesel fuel to reduce pollution, and the switch to ethanol as a gasoline additive in certain markets.

Oil company profits are way up. Are they taking advantage of the situation? In a local market, oil companies charge what the market will bear, while taking cues from commodity and spot markets. Higher prices eventually attract additional supply to the market, which will push prices down.

Some gasoline station operators raise prices during supply disruptions to avoid running out of fuel. That is because they have fixed costs to cover whether or not they are selling fuel.

Will prices eventually level off or even go back down? Gasoline prices are likely to fall from the levels caused by the ethanol conversion, but the federal Energy Information Administration said this month it expected regular gasoline to average $2.62 per gallon nationally this summer. But that estimate assumes nothing goes wrong.

Valero Energy Corp. said Tuesday that U.S. gasoline supplies were enough for 22.2 days, a low level for this time of year. Meanwhile demand is up 1 percent so far this year and is expected to be strong this summer. That will keep upward pressure on gasoline prices.

It's the damn Republicans! The elections in November are why the prices come down from $2.50 or so to about $2.00.
Officially, the economists say it's investor panic - the same mess that caused the Great Depression (Also the Republicans fault!) Apparently investors are upset with the war and the weather that they trade shares about and start oil rumors that cause price fluxuations.

supply and demand.... Or could it be that the free market has been manipulated by the large energy companies....

greed, tricks, maybe they don't want you to vote for the gas tax on them.

The heaviest briefcase of course.

oil companies set prices which depend on oil from opec countries.

It is the companies that own the gas stations. They are just yankin' our chains. They are also trying to put the people out of business who are selling biodiesel and ethanol, damn them.

Ken Lay is doing it. He faked his death, and now he's manipulating the world from the secret hideaway in Tahiti that he shares with Elvis.

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