Supply and demand laws
Reply 1
Supply and demand laws cause the price of oil to change. When supply outweighs demand, rates are likely to fall, and when the demand exceeds, supply prices will rise. For instance, in China and Europe drop in oil prices in 2014 contributed to less requirement compared to the supply. The excess supply caused the prices to drop instantly. Another factor which makes prices to change is politics and natural disasters. Natural disasters can cause damages which can cause a lot of changes. The loss will make the cost of production to rise, and raw materials might be scarce. Such kind of changes will make the prices to grow beyond the anticipations of the customers. Sometimes the government still causes fluctuation due to the
strict policies which they impose. Policies like high taxation to increase income makes the manufacturers to the fuel to raise their prices. The prices will increase since the organization aims to make a profit and all circumstances.
Reply 2
Fuels tend to increase due to various reasons. Some of the points are discussed below;
In case of a decrease in the supply of crude oil like a natural disaster, gas prices will rise dramatically. The increase will be a result of a shortage of furls available in the market. The cost of making gasoline also determined the changes in prices. Gas doesn’t just take themselves in stations. There are processes which should be followed to come up with the final product. All these involve using money in every step of trying to make the final quality product. Resources should be as well be used in all processes. If resources are expensive or scarcity, there will be a possibility that the manufacturers will incur a lot of cash. When the cost of production is high obvious, the prices will increase. Market confidence is another factor which contributes to the changes in rates. If organizations are concerned if there will be enough gas in future, they will buckle down and increase prices, but if they realized prices would be reasonable.