Oil & Gas Prices

Running head: Expository Essay - Oil and Gas Prices

What Affects Oil and Gas Prices?

    While the US government and States continue to add tax to gasoline, rising gas prices continue to affect the American household. OPEC, Stock Traders, Federal, and local governments all have a hand in determining the prices the American population pays at the pumps. The rising price of fuel whether gasoline or diesel causes companies to downsize to meet projected profit margins forcing a trickledown effect causing Americans to use up their personal savings to survive the economic strains.

Determining Crude Oil Prices

    A number of items contribute to or has an influence on the outcome of oil and gas prices. Oil price futures affect crude oil prices; with this, the Stock Market Trader is involved.   Oil futures contracts, are an agreement to buy or sell crude oil at a specific date in the future at a specific price; this forecasts the value of oil into the future. According to Kimberly Amadeo (2009), "Oil future prices fluctuate daily, depending on what investors think the price of oil will be in the future, Traders spend all day every day researching their particular commodity. This means they are very good at it, so you can totally trust their estimation."
    Supply and demand also affects crude oil prices. Kimberly Amadeo states, "OPEC, Organization of the Petroleum Exporting Countries, is an organization of oil-producing countries that have power over most of the world's oil. In 1960, they formed an alliance to regulate the supply, and to some extent, the price of oil" (Amadeo, 2009, p. 1). She also has determined that, "OPEC's goal is to keep the price of oil at around $70 per barrel. If it is much higher, other countries would have the incentive to drill for new oil supplies." In her article titled Strategic Petroleum┬áReserves Amadeo states, "We also have our reserves; the U.S. Oil Reserves are the world's largest stockpile of emergency crude oil. The oil is...