Wondering Why?

Why do Fuel prices increase?

Why do Fuel prices increase?

The Diesel price was lesser than gasoline prices previously. But, we can observe now that diesel prices are higher than gasoline. The first reason for this is the increasing demand for fuel all over the world. The other reasons that might result in increase in fuel prices are restrictions of the environment or high taxes of the government. If the commodity is made in high quantities and if it is desired by many people, then the demand for it increases. If the demand for a commodity increases then its price also will increase. Similarly, if fossil fuels are prepared in small quantities, the demand for them increases and its price also rises high.
Many factors were known to influence the retail price of the fuel that we pay. These factors are cost of crude oil and refined products along with other factors like ACC levies, recent emissions and trading schemes. The crude oil determines significantly the fuel cost. The crude oil was marketed as a major commodity in American dollars in the international market. The market is affected by the global demand, political matters, global supply, and ability to manufacture the commodities.
The refineries buy the crude oil sold internationally in order to convert it into petrol and diesel. Apart from the crude oil, the refined commodity also has its own cost in the international market. The market for crude oil in turn runs with the influence of global demand and supply. So, it is concluded that the combined influence of both the factors like crude oil price and refined product price determines the cost of oil you are using to move your car.
The other important factor that affects the fuel prices is United States and New Zealand exchange rate. The exchange rate of US/NZ was considered a new factor as the oil and refined products were used in US dollars. As the crude oil should be inevitably imported, the international shipping cost also plays important role in determining the fuel prices.


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