“What’s up with gas prices?” is a question I get asked a lot. Because crude oil is the primary component in gasoline production, the price rises and falls with the cost of crude—which is set by supply and demand on the global commodities market.
In 2008 and 2009, weak economic conditions in the U.S. and around the world led to less demand which drove prices down. Now, with the worldwide economic recovery underway, demand is on the rise again. Meanwhile, unrest in the Middle East and North Africa has put supply at risk. This combination of rising demand and the risk of reduced supply is pushing prices higher. In addition, the weakened value of the dollar means U.S. consumers are more affected by rising crude prices than the citizens of other countries.
At $103 per barrel of crude oil, refiners spend over $2.40 for the amount of oil needed to make one gallon of gasoline.