Essay: Relationship between Prices of Gasoline and Crude Oil

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Essay: Relationship between Prices of Gasoline and Crude Oil

Sample Essay

Discuss the relationship between the retail price of gasoline and the price of crude oil.

The price for every finished product is directly related to the price of the raw materials. This means that the price of gasoline is directly affected by the cost of the crude oil. According to The Time It Takes website, Marathon sources 12%, 14%, 30% and 44% of its crude oil from Mexico, Canada, other foreign markets and US domestic market respectively. This means that the prices of the gasoline are affected by internal US economic conditions and the global economic conditions ((Marathon Petroleum Company, 2009). The prices of the gasoline in US are affected by:

  • Cost of crude oil
  • Whole sale prices
  • Cost of refining
  • Distribution and refining costs
  • Costs of the retail stations
  • State, federal and local taxes and
  • The marginal profits and losses

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