http://www.bizjournals.com/losangeles/stories/2007/02/12/daily49.html
Gas prices continued to climb up this week across Southern California, although it is unclear whether the upturn is the beginning an annual springtime price spike at the pump.
According to the Automobile Club of Southern California's Weekend Gas Watch, the average price of self-serve regular gasoline in the Los Angeles-Long Beach area is $2.643, which is 8.4 cents higher than last week, six cents higher than last month, and seven cents higher than last year.
On the Central Coast, the average price is $2.799, up 8.1 cents from last week, half a cent above last month, and 10 cents higher than last year.
In the Inland Empire, the average price is $2.646, eight cents above last week, four cents higher than last month, and six cents higher than last year.
"Supplies have tightened in California because of issues such as last week's shutdown of the state's fifth-largest crude oil field after an explosion," Auto Club spokesperson Carol Thorp said in a statement.
"But even without disasters, we've seen a pattern over the last seven years of a spring gas price spike due to increased demand and consistently low inventories at this time of year. The Auto Club recommends that during periods of price increases such as this one, drivers should make extra efforts to conserve gasoline."
So I knew there would have to be an article out there about gas that has to do with supply and demand and this was just the first good one that I came across. The article talks about California's rising gas prices, which is partly the result of a decrease in supply because of an explosion at a crude oil field. The article explained that there is also more demand and lower inventories at this time of the year. I understand there being more demand; people are out and about during the holidays, then in January they hibernate to get over that holiday rush. Now its February and people are driving more again. I wasn't sure why supply would be low consistently at this time of year. Maybe suppliers realize the pattern of people demanding less during January, so less is going to gas stations. Then when people start demanding more, not enough can be supplied in time to meet the demand??
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Hey, Katie!
Since the vast majority of the oil is supplied by a cartel (oligopoly), they completely control the oil supply, and will change the quantity supplied to keep the prices as high as possible for them - then, their profits are high and any supplier likes it that way. :)
It's kind of like a "gentleman's agreement" - nothing ties individual countries to keeping prices at a certain level, but all realize that they will make higher profits if they do so. It's called game theory. You never know what your opponent will do.
With your last question - yes, and that drives the price higher. :)
Good job!
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