Go Greener Tips

A lot of people are wondering why gasoline prices today have reached at an all time low when just a few months before, the price for gasoline was really the most expensive since the Iran-Iraq war. Well, it’s not that people are complaining about it but people are really curious as to why this happened. Why the sudden rise in price and the sudden decrease in price?

As most people know, the price of gasoline and other petroleum products depends on the price of oil. If oil is expensive, then gasoline will also be expensive. Now, the price of oil depends largely on the law of supply and demand. If there is a surplus of oil in the reserves and limited demand for it, then the price of oil will be cheap which also means cheap gasoline and other oil products.

Today, there are quite a lot of supply of oil in the reserves and limited demand. This basically explains why gasoline has reached an all time low when it comes to the price. Now, why is it that gasoline is at a very low demand when winter is already coming? This is the time of the year where oil demand is usually very high as people use it in order to heat their homes.

There are quite a lot of reasons why there is a low demand for oil and high supply for it. The first reason is the high priced gasoline only a few months before. People became more conservative when it comes to buying gasoline for their car. Some have started selling their old conventional car and buy new hybrid vehicles that are more fuel efficient. Others are now using mass transportation system such as the bus and subways as a primary way to go to work and school. And, there are also others who organized carpools with neighbors and coworkers in order to save gasoline. People have adjusted to the past gasoline price hike and is continuing to practice it because of the huge savings they made and only realized.

So, just what is the reason for the vast reserves of oil? Well, oil companies thought that Asia is continuing to grow and demand more oil especially China. However, after the 2008 Beijing Olympics, the growth in Asia started to cool down. Also, the growth was affected by the world financial crisis which is also affecting the US today.

Because of this, Asian countries have limited the amount of oil they buy and the anticipated demand didn’t come true. The reserves were unusually high and with limited demand for oil, the price for oil took a plunged along with the price of oil products, such as gasoline.

The world financial crisis is another reason why demand for gasoline and oil is continuing to go down. The fact that people are becoming shrewder when it comes to spending their money, they now save money for emergencies instead of filling their cars with gasoline.

As you can see, there are quite a lot of reasons why gasoline price today is continuing to plunge. In fact, just last July, the price for gasoline was already at its highest at 4 dollars. Just this November, the price went down to almost 2 dollars. As you can imagine, that’s a lot of decrease. These are the reasons why gasoline prices are getting lower and you can continue to expect it to go even lower by the end of the year.

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