There’s nothing quite like the freeing feeling of cruising down an open highway on a summer road trip—no stress, no worries and nothing ahead but fun. Unfortunately, those happy feelings can all come crashing down as soon as you pull up to the pump at the gas station. Your summer travel budget could be cut in half based on the high gas prices. The cost of gas historically skyrockets during the summer months, leaving many drivers feeling stuck because they don’t want to break the bank. On average, gas prices have been known to increase by about 50 cents from April through September. On top of that, the annual average has been creeping even higher during recent years.
Let’s take a closer look at the causes of high gas prices and their impact on transportation service in Tacoma, WA
Supply and demand
Supply and demand has a direct effect on the price of practically every product in the world—including gas and oil. The cost per gallon will increase drastically when the demand is greater than the available supply. For example, gas prices fell to historic lows when U.S. shale oil producers introduced new supplies into the market, but then the boom reversed when the low prices put many of the producers out of business.
Seasonal demand tends to be the driving factor during the summer months. Oil futures traders know there’s a high demand for gas during the summer as everyone heads out on vacation. As a result, they will start buying oil future contracts in the spring at an inflated price in anticipation of the increased demand, which leads to higher prices during the months after.
Value of the dollar
A significant decline in the value of the dollar can also drive up the price of gas. All oil contracts are completed in U.S. dollars. Oil companies require more dollars to receive the same value of gas even as the currency’s value fluctuates. Distributors are forced to make up the difference by charging more at the pump. The dollar’s value has been gradually decreasing over the past decade, which has likely contributed to the steady increase of average gas prices.
Unfortunately, this one is a self-fulfilling prophecy. Commodities traders will buy oil and gas at the commodities futures markets. The companies agreed on a price for the gas that will be delivered in the upcoming months. They’re essentially purchasing the gasoline for the price they think it will cost in the future based on past trends and future projections. If they think there will be high demand, the traders will bid even higher to ensure they still make a profit. This leads to an asset bubble where the customer pays the price at the pump.
Don’t let high gas prices stop your summer fun. Book a ride with Around the Sound/TransPro instead. We offer some of the finest transportation service in Tacoma, WA at competitive rates, regardless of gas prices. One of our professionals will get you from point A to point B as safely, quickly and comfortably as possible. Call today to make your reservation!
Categorised in: Transportation Service
This post was written by Writer