Who mostly determines the price of a gallon of gasoline in America?

If everybody in America took two days off and simply stayed home, there would be a sharp decrease in the consumption of gasoline. To be sure, there is a fair amount of manipulation by investors, but ultimately the power investors has pales in comparison to consumer buying power Americans can bring to the table.

bur I do here what you're saying.

Two days off would mean there would be glut of 40,000,000 barrels in the US market. Law of supply and demand says that if there is a glut, prices must come down to compensate.

I was just commenting on that yesterday

BUSH I



BUSH II



Are you ready for BUSH III?

the question was asked, "What determines the price of something?" and most of the students replied, "Supply and Demand" or some other guess. The correct answer, according to that teacher, is "What the buyer is willing to pay." On that theory, the price of a gallon of gasoline in America is determined by the end user and what they are willing to pay. It's obvious now that end users are willing to pay $4 a gallon because that's what it's going for here in San Diego. If users weren't willing to pay $4 a gallon, it wouldn't be priced at $4 a gallon.

Since gasoline is an addiction, the standard rule of thumb applies: to an addict, the price doesn't matter, only the availability matters. People are still going to buy gasoline as long as it is available. The only thing that will get them upset is the unavailability of it.

in addition, we cant not pay up for gas, we are too dependant.

Gasoline's price is based on a series of inputs.

1: Oil
1a: Oil extraction

1b: Oil transport (for instance by tanker to refinery)

1c: Oil contracts for delivery
1c1: This is where speculators get involved.

2: Refining process
2a: Notice how many new refineries haven't been built
2b: Notice how many refineries are shut down for "maintenance" which constricts supply of gasoline

3: Delivery
3a: Delivery by tanker truck through our vastly inefficient road system. If we had electric cars, this would be another wonderful side effect. No need for half the tanker trucks on the road. No need for gas stations on every corner.


Global demand is certainly a key component in the price, since India and China are experiencing rapid growth in their middle classes which is leading to new drivers. Other countries are experiencing less local fuel production, which is leading them to import, further pulling on demand.

Bottom line. We need a cheap electric car, and a decent charging system pronto. Add to that a serious reworking of the mass transit system in most cities, and we start getting somewhere. Let gasoline go away. I'd love it if oil were just used for plastics and fertilizer.