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Energy Information Agency: Overview on Gasoline


Gasoline is considered as one the most important commodity that surmised these days. It is the main ingredient in transportation, in industry and in household. During the time when the automobile is presented in the market, the gasoline industry at the same time was created. However, during that time, a fraction of natural gasoline called the ‘straight-run gasoline’ that eventually came from distilled crude oil is the one being used to run the automobile. The process can only yield to less than 15 barrels of gasoline from each barrel of oil. When massive production of cars started in 1908, several oil refineries cannot keep pace on the growing demands. By that time, some scientists develop another way of producing gas not only through crude oil but to some other energy source that is through the form of hydrocarbons. William Burton is the proponent of thermal cracking, it by which hydrocarbons was break down through heat and pressure to create a lighter compounds used in gasoline. His invention became one of the foundations of oil companies to produce oil produces with refined component. During World War II, the full realization on gas demands become apparent. In the United States, one of the Allied powers has increased its manufacturing margin in order to be used in aviation fight which on the other hand poses a threat to the contending parties, the Axis powers. By that time, Germany is in grim situation, they had to rely on the power of coal and oil. In times of needy so they say, brilliant minds came to conquer, Friedrich Bergius a German chemist had developed another method of producing oil called the Fischer-Tropsch synthesis which is obtaining gasoline through hydrogen and carbon monoxide. The post war era becomes one of the leeways in discovering alternative gasoline. However, environmentalists refuted some of the methods in obtaining gasoline. It eventually destroys the environment leading to some environmental changes such as global warming, acid rain and greenhouse effect. One of the offshoots of gasoline consumption is the carbon monoxide being emitted by an engine that is out of tune. Government regulations were used to counteract the problems on carbon monoxide proliferation. By the end of the 20th century, many oil companies have structured their own way producing oil through different forms of energy source. The problem now is while there is plenty of oil companies, prices now oscillate in the world market. The intrusion of global financial crises aggravated some of these large industries; prices have been deflated and inflated at some other time. But not this time prices of gas continue to soar. Some of the several trends were shown in the succeeding paragraphs.

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Global Trends on Gasoline

The year 2000 is an epoch of crisis financially. While there is so much to tackle with poverty issues, here comes energy crisis. Accordingly, there are a lot of reasons why oil companies have to aggrandize their products. One concrete reason perhaps is economic problems. Many gasoline companies tend to increase the price of gas to cope with inflation rate especially that there is no certainty if the country will steadily tread economically. The indicator can be viewed in the increasing price of basic commodities which proportionally increases as the gas price increase. Another factor why oil increase is initially, there was a greater consumption and it would be a lot harder for them to generate oil, there is so much digging to be undertaken. We have traced back how the demand on gasoline has become increasingly alarming on the oil diggers and oil companies. Consumption had soared to greater altitude that many oil companies tend to increase the price of oil to take advantage of the situation. As urbanization had developed in all parts of the world, eventually there is a greater consumption of energy such as oil and gas, it is thus an essential part of a civilized nation. Also, many oil companies were beginning to accumulate larger profits, and so several business-minded people venture into it. To locate an abundant place to generate oil will mean decreasing the energy supply primarily the main source of oil. Others have that notion that it is the few capitalists who have managed to increase or decrease the price of oil depending in their full prerogative such as the OPEC in the United States. There is that manipulation on the prices of oil not because oil price had increase in the global market but ultimately those that played an important role are also the sharks behind that social scheme. According to the Consumerist there are three markets that interact together which ultimately affects the gas and oil in the market. It is the contract, pot and features. When once oil companies find a suitable place to explore and such exploration would prove to be financially able, they will now produce crude oil and turn to oil refineries. It is in this way they can augment their profits. The system on oil pricing lies depending on the agreement of the oil companies and dealers, oil companies and refiners and independent dealers. Refiners on the other hand had to be efficient on their activity to insure that consumer will continue rely on them. In the United States where there are greater consumption of gasoline, gasoline inventories in the United States fell to ¼ because of lower imports and refinery maintenance according to the Energy Department. In order to counteract the situation, they will increase the price of oil in order to remain financially stable. Despite the oil increase many drivers still have large consumption essentially because oil is one the fundamental part of the contemporary life. In Third World Countries, the situation aggravates the condition of the people. Eventually, when oil increases so is fare increases to transport vehicles. And because of the situation, many people had rather choose to leave their cars in their home and would have blend in with the multitude along with other people while waiting for transport vehicle. Similarly in Ukraine, the price of gas had increased because of inflation. The signed contract with Russia may somehow have helped them to alleviate the oil price increase. In Britain, in the year 2003 gas price were lower in terms of its real price. However, prices had risen in the succeeding year. In the United States where there is a large consumption of gas there is about 17.7 million barrels to 20.7 million barrels of consumption a day. Notwithstanding the huge amount of profits being collected, the price of oil still is so high.

Details were made apparent by the Energy Information Report which initially had shown the nominal prices of oil most especially petroleum.

Table 2. U.S. Energy Nominal Prices
2004 2005 2006 2007 2008
Crude Oil Prices
(dollars per barrel)
West Texas Intermediate Spot Average 41.44 56.49 66.02 72.32 101.45
Imported Average 35.89 48.9 59.05 67.13 95.28
Refiner Average Acquisition Cost 36.96 50.25 60.26 68.09 96.74
Petroleum Products
(cents per gallon)
Refiner Prices for Resale
Gasoline 129 167 197 218 261
Diesel Fuel 119 174 201 220 301
Heating Oil 113 162 183 207 276
Refiner Prices to End Users
Jet Fuel 121 174 200 217 303
No. 6 Residual Fuela 74 106 122 139 202
Propane to Petrochemical Sector 73 90 100 117 141
Retail Prices Including Taxes
Gasoline Regular Gradeb 185 227 258 281 329
Gasoline All Gradesb 189 231 262 285 335
On-highway Diesel Fuel 181 240 270 288 381
Heating Oil 162 215 248 272 336
Propane 152 176 198 215 249
Natural Gas
(dollars per thousand cubic feet)
Average Wellhead 5.45 7.26 6.4 6.39 8.19
Henry Hub Spot 6.08 8.94 6.94 7.17 9.25
End-Use Prices
Industrial Sector 6.53 8.56 7.86 7.59 9.64
Commercial Sector 9.43 11.34 11.99 11.31 12.13
Residential Sector 10.75 12.7 13.75 13 13.74
Power Generation Fuel Costs
(dollars per million Btu)
Coal 1.36 1.54 1.69 1.78 2
Natural Gas 5.96 8.23 6.92 7.09 9.44
Residual Fuel Oilc 4.73 7 7.8 8.4 13.89
Distillate Fuel Oil 8.13 11.53 13.21 15.17 20.64
End-Use Prices
(cents per Kilowatthour)
Industrial Sector 5.3 5.7 6.2 6.4 6.9
Commercial Sector 8.2 8.7 9.5 9.7 10.3
Residential Sector 8.9 9.4 10.4 10.6 11.3

Source. Energy Information Agency

Furthermore, the general consumption of gas is apparent in the report made by Department of Energy (DOE).

Regular Gasoline price in today's dollars
Figure 1. Regular Gasoline price in today’s dollars

In the end the price oscillation of oil and its eventual and gradual increase may force other people to resort in natural gas by converting their internal engines to adapt in the new gas.

Also conservationists are alarmed that the price of oil may entail a culture of oil dependence in the United States for instance has an average consumption $3000 a year for their home and transportation. Oil increase will also trigger massive protests especially that shall be conducted by organized group.

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Works Cited 

  1. Energy Information Agency. Forecasts and Analysis. 2008. Web.
  2. State of Illinois. Gas Price Monitoring. 2004.
  3. Segura, Edilberto L. et al. Ukraine-Impact of Gas Price Increase. The Blayzer Foundation 2006.

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