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All About Gas Prices

Gas is a product of crude oil. Crude oil undergoes a fractional distillation thereby producing a clear liquid called gas. Gasoline is mostly used as fuel in cars, machines and other combustible engines. Gas also coined as petrol, was first used as fuel in the 19th century during the invention of the Otto engines or the first automobile that have combustible engines. Since then gas has been a hot commodity in the transportation sector. After its discovery, further modifications were done and finer crude oil was produced to make the gas and diesel fuel that we know now.

Gas prices are dependent on oil prices since gas is only derived from oil. Oil prices directly affect gasoline values because once the oil price increases, so does the price of gas. Oil prices increase because of factors like expenses on the drilling well on the ground, transportation of oil from the source to the oil companies, costs of refining crude oil to produce gas, distribution of gas from refinery to local gas stations, local tax imposed, the demand for gas and the supply available. All of this adds up to the final price of gas sold per liter in a local gas station and the citizens are the ones who shoulder all these costs.

To decrease the costs of gas or petrol some countries impose the addition of certain percentage of ethanol on gas, other countries subsidize the cost of gas and other petroleum products, because when there are subsidies, transportation of goods and services is cheaper therefore it reflects on the price of goods and services in that country. However, it was said that subsidies lowers fuel efficiency. Also most of the countries that subsidize the costs of gas are oil-rich countries like Venezuela, Egypt, Iran, Saudi Arabia, Malaysia, Burma, Kuwait, etc.

US used an approximate of 18 million barrels of gas per day in 2011, US accounts for the 44% of gas consumption in the world. While Europe has lesser percentage of gas consumption because the government increased oil prices to 1.75 Euro per liter or twice the amount of gas in the US. However, European gas consumption is still higher compared to other countries. The average price of gas in the US from 1998 to 2004 is $1 to $2 per gallon. In 2005 to 2008 prices of gas in the US were unstable and gasoline prices reached an all time high of $4.11 per gallon but later decreased to $2.62 per gallon in 2009. In 2010 and 2011 the prices increased and in 2012 price of gas is $3.74 per gallon.

Government policies have great affects on gas price and silver prices; they have control on the price most especially when they are subsidizing the said product. However, there are issues and problems arising from too much usage of gasoline because it is the major contributor to climate change. Burning of fuel produces carbon dioxide thereby enhancing the green house effect and worsening climate change. Nowadays, environmentalist are developing green ways to decrease the world’s carbon footprint to mitigate climate change.

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