Understanding the price of petrol

Sometimes driving to the petrol station can seem like an absolute lottery, with gas prices fluctuating up and down all year round.

For fleet managers who are looking to reduce the overall fuel consumption of their company fleet, this situation can be particularly headache-inducing.

That is why it can be helpful to understand the various factors that go into petrol price determinations in order to better understand why we pay what we do at the pump.

Of course, the basic economic principle of supply and demand is a major part of this. Situations overseas, such as civil wars, civilian protests and natural disasters can all influence the amount of crude oil that is extracted and exported.

Demand can also vary as global situations fluctuate. In recent decades the growth of the middle class in places like China and India has caused these countries to require more petrol and thus there is less to go around.

Other factors - such as seasonal influences, pricing wars between neighbouring gas stations and state and federal taxes - can also contribute.

Inflation too has a serious impact on gasoline prices, so try not to feel too depressed when you think back to the days when gas was less than $1.50 per litre.

Regardless, it is very difficult to accurately predict the future pattern of petrol prices, so it is important that you do what you can now to ensure car fuel consumption is minimised in your fleet.