Gas prices have steadily increased across the nation, but have fallen for the first time since December according to the Energy Information Administration.
The national average of gas prices decreased by $.025 last week to $3.759 per gallon.
Gas prices are a reflection of crude oil prices which fluctuate daily.
The cost of crude oil accounts for 72 percent of the price of gasoline while the remaining 28 percent comes from the cost of distribution, refining and taxes.
When oil prices rise or fall, consumers can expect to see it at the gas pump six weeks later.
Oil prices are affected by supply and demand.
However, oil prices are primarily controlled by oil futures contracts, which are traded on the commodities futures exchanges.
Thus the price of oil depends on what investors think the price will be in the future.
When traders think oil will be high, they bid it up even higher creating a self-fulfilling prophecy of high oil prices.
The recent fall in prices serves as an excellent example since many traders bid lower to brace off the impact of government budget cuts but the stock market as a whole has yet to see any effects from the cuts.
“Suppliers raise prices on the companies and as a result the companies raise the prices on the consumers. It’s a domino effect,” said sophomore psychology major Jade Walker.
Recently gas prices have risen for numerous reasons.
In August, prices were high as a result of Hurricane Isaac. In anticipation of the Category I hurricane, refineries in the area shut down production. As a result, crude oil production lost a lot of barrels daily. The national average for the price of gas jumped $.05 in one day, to $3.80 per gallon.
The steady rise in gas prices has many people asking if crude oil prices serve as the primary cause of gas price increases.
According Art Caden, assistant professor of economics at Stanford University and Forbes contributor, the oil companies increase in the price is an appropriate response to long gas lines rather than a cruel attempt to “stick it” to the helpless.
When people begin lining up to get something at the going price, this tells merchants the price is too low. Raising the price corrects the imbalance and sends consumers an important signal to redouble their efforts to conserve the resources that have rising prices.
“I personally feel that it is no reason for gas prices to go up. I really think it’s just the oil companies just being money hungry,” said junior mass communication major Akki Harvey said.