OIL PRICES
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The first accelerated increase of crude oil price has started immediately in the beginning of the Second World War. After the war
developing industrialization and agricultural activities required
more fuels and crude oil for agriculture activities and transport of
goods from manufacturer to the consumer, which was followed by
marginal price increases for two decades (1950-1970), allowing the
new way to develop. Since then, the key drivers from increased
energy demand and the accelerated increase of crude oil prices have
been growing population and increased economic. Streamlining
of energy consumption efficiency alleviates this factor, improving
transport engine efficiency and the efficiency of management of
the whole transport section). In addition, the increased cost of finding and developing oil is also a contributor to increased crude oil
prices. For example, in 2006 it was estimated that the cost of finding and developing oil on a per barrel basis was three times greater
than in 1999 (Gonzalez, 2006).
6.5 The Anatomy of Gasoline Prices
Gasoline accounts for about 50% of the consumption of petroleum
products in the United States and the price of gasoline is the most
visible among these products. As such, changes in gasoline prices
are always under public scrutiny and price shocks can originate
at any point from crude oil prices to the final price at the gasoline pump. Shocks originating at an intermediate step, such as the
wholesale price of gasoline, may reflect a bottleneck in distribution,
while price shocks originating farther upstream are more likely to
represent the effects of variation in crude oil supply. Price shocks
originating at the retail level are more likely to represent variation in the demand for gasoline. Given the history of oil-supply
shocks and indications that demand for gasoline is relatively stable, intuition suggests that price shocks are more likely to originate upstream and be transmitted downstream (Norman and Shin,
1991;Balkeefa/., 1998).
Recent price increases have led some to call for federal price controls for gasoline and/or related oil products as well as some form
of windfall profits tax on the oil industry.
Proponents of intervention contend that gasoline markets are not
competitive (with some accusing producers of price collusion), that
fat profit margins induce little more supply than might otherwise
175
The first accelerated increase of crude oil price has started immediately in the beginning of the Second World War. After the war
developing industrialization and agricultural activities required
more fuels and crude oil for agriculture activities and transport of
goods from manufacturer to the consumer, which was followed by
marginal price increases for two decades (1950-1970), allowing the
new way to develop. Since then, the key drivers from increased
energy demand and the accelerated increase of crude oil prices have
been growing population and increased economic. Streamlining
of energy consumption efficiency alleviates this factor, improving
transport engine efficiency and the efficiency of management of
the whole transport section). In addition, the increased cost of finding and developing oil is also a contributor to increased crude oil
prices. For example, in 2006 it was estimated that the cost of finding and developing oil on a per barrel basis was three times greater
than in 1999 (Gonzalez, 2006).
6.5 The Anatomy of Gasoline Prices
Gasoline accounts for about 50% of the consumption of petroleum
products in the United States and the price of gasoline is the most
visible among these products. As such, changes in gasoline prices
are always under public scrutiny and price shocks can originate
at any point from crude oil prices to the final price at the gasoline pump. Shocks originating at an intermediate step, such as the
wholesale price of gasoline, may reflect a bottleneck in distribution,
while price shocks originating farther upstream are more likely to
represent the effects of variation in crude oil supply. Price shocks
originating at the retail level are more likely to represent variation in the demand for gasoline. Given the history of oil-supply
shocks and indications that demand for gasoline is relatively stable, intuition suggests that price shocks are more likely to originate upstream and be transmitted downstream (Norman and Shin,
1991;Balkeefa/., 1998).
Recent price increases have led some to call for federal price controls for gasoline and/or related oil products as well as some form
of windfall profits tax on the oil industry.
Proponents of intervention contend that gasoline markets are not
competitive (with some accusing producers of price collusion), that
fat profit margins induce little more supply than might otherwise