Today, gas prices in Chicago off my exit for work are $3. 99 a gallon for unleaded gas at the Marathon gas station at the corner of South Blue Island Eave and Western Eave (Gas Prices in 60608 Zip Code, Subsidy). That is 50 cent savings per gallon. If I just filled up 10 gallons, which is a savings of $5. It doesn’t sound like much, but used to fill up twice a week on my about 46 mile commute to work. For the month, that would be an estimated savings of $40 if I do not use my vehicle for anything else but work. Now my cousin Edgar, who is always thinking about the next get rich scheme, is thinking bout possibly opening up two gas stations.
He believes that he will make a good profit if he also sells convenience items at both of his gas stations. He found out I was taking this Economics course and figured would be happy to help him research his idea of opening two gas stations in the area. I wasn’t too thrilled, as he always is trying to find get rich quick schemes, but this actually seemed like a legit prospect and it sparked my interest. Not that am thinking about opening a gas station, but just what entails the gas industry. Mean, gas prices vary greatly by states, taxes, neighborhoods, and competition.
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Gas prices changes every day and even twice a day because oil and gas prices fluctuate. Gas prices seem to be the one of the most fluctuating and variable prices that we deal with. Gas prices may suddenly and dramatically go up one day, after being somewhat constant for a period. The final gas price per gallon includes crude oil prices, refining costs, distribution costs, marketing costs, and federal, state, county, and local taxes. Gas prices also fluctuate because of oil supply disruptions, refinery disruptions, political factors, demand, and world conflicts like the Ukraine Crisis, Gaza Strip bombings, and now ISIS terrorists in Syria.
Demand Determinants In economics, demand is defined as the goods and services people are willing and able to buy during a certain period of time at various prices, holding all other relevant factors constant (page 70, R. G. Hubbard, & A. P. O’Brien). So, in our case the demand in motor gasoline has been touchy. As gas prices go up, demand should go down, and vice versa, when gas prices go down, demand should increase. The Law of Demand basically demonstrates the relationship between the price of a product, and the quantity the consumers demand on that product (page 71, R.
G. Hubbard, & A-p. Cobber). Currently, the days of gas guzzling giant Subs and Hummers are gone, now comes the age of more fuel efficient vehicles and more compact vehicles. Hybrid vehicles are displaying strong numbers as consumers are trying to rely less and less on fuel. Some hybrid vehicles have demonstrated up to a 50% fuel reduction (6th paragraph, C. Johnson). For example, I used to drive a 2000 Chevy Impala that held about 17 gallons of gas, which I used to fill up twice a week and that was only going to and from work. When gas was under $3. 0 a gallon it wasn’t too bad, but when gas prices sky rocketed in 2011 to over $4. 00 a gallon is when it really hurt. On average was doing about $140 a week for my ;ice fill ups for my impala, or about $560 a month on gas! Well after several car issues, I decided it was time to get another car.