Why Do Gulf Coast States Have Lowest Gas Prices?
The gasoline market in America is simply one of the most important markets that controls the prices of goods and services produced in every economic sector.
Consumers react to higher gasoline prices by consuming less of it.
However, like the air we breathe, gasoline is very much a needed resource for everyday Americans.
Unlike the air we breathe, gasoline is not free, and is ruled to a large degree by the Law of Scarcity.
Furthermore, there are many factors that can influence the supply and demand for gasoline.
In the short term, we gasoline consumers will do our best to consume a practical amount of gasoline by cutting out on our long distance vacations or even by purchasing more energy efficient vehicles.
However, increasing the supply of gasoline, or a close substitute, not the demand itself, will most likely keep the long term price of gasoline down.
Gasoline is energy, and energy is one of the inputs that helps produce all goods and services.
Moreover, there are 142 major gasoline refineries in America according to the Nation's Refinery & Capacity Data.
These markets are spread out in every region of America with Texas having the highest concentration of refineries.
As a matter of fact, the Gulf Coast region, if expanded to include states like Arkansas and Georgia, actually has more refineries, proportionally, than the other regions of America.
This is a very important factor because the market mechanics that influence the price of gas are very similar to the market mechanics that influence the price for any other goods and services.
The Gulf Coast region has the lowest gas prices in the country and Texas, on average, has the second lowest gas prices of any other state.
This only goes to show that the more suppliers, or supply in a specific market, the results will most likely include lower costs for consumers.
Gasoline is a relatively inelastic good anyways, in that, as the price goes up, the amount demanded does not decrease substantially.
For example, if gas in America were to go up tomorrow by $0.
50 a gallon, it is not like Americans can just start substituting water in their gas tanks.
The result would be that Americans will just buy the same amount of gas, albeit, they will show their displeasure to those they buy their gas from.
This only goes to show our dependence of cheap energy like gasoline.
The consumption of gasoline is dependent very much on the price of gasoline.
If there is a surplus in the production of gasoline, the result would be lower prices for consumers.
If the goals are to keep gasoline prices cheap, then one of the goals would be to alter one of the factors that could shift the Supply Curve rightward, like increasing the number of suppliers.
This of course, this is dependent on the fact that there is enough crude oil available to be extracted from the ground or under the oceans.
As pointed out earlier, there are more suppliers in the Gulf Coast region than other regions, and coincidentally, gasoline prices are cheaper.
Other factors that can help decrease the price of gas is simply increasing the supply of substitutes and creating better technology for harvesting crude oil.
Consumers react to higher gasoline prices by consuming less of it.
However, like the air we breathe, gasoline is very much a needed resource for everyday Americans.
Unlike the air we breathe, gasoline is not free, and is ruled to a large degree by the Law of Scarcity.
Furthermore, there are many factors that can influence the supply and demand for gasoline.
In the short term, we gasoline consumers will do our best to consume a practical amount of gasoline by cutting out on our long distance vacations or even by purchasing more energy efficient vehicles.
However, increasing the supply of gasoline, or a close substitute, not the demand itself, will most likely keep the long term price of gasoline down.
Gasoline is energy, and energy is one of the inputs that helps produce all goods and services.
Moreover, there are 142 major gasoline refineries in America according to the Nation's Refinery & Capacity Data.
These markets are spread out in every region of America with Texas having the highest concentration of refineries.
As a matter of fact, the Gulf Coast region, if expanded to include states like Arkansas and Georgia, actually has more refineries, proportionally, than the other regions of America.
This is a very important factor because the market mechanics that influence the price of gas are very similar to the market mechanics that influence the price for any other goods and services.
The Gulf Coast region has the lowest gas prices in the country and Texas, on average, has the second lowest gas prices of any other state.
This only goes to show that the more suppliers, or supply in a specific market, the results will most likely include lower costs for consumers.
Gasoline is a relatively inelastic good anyways, in that, as the price goes up, the amount demanded does not decrease substantially.
For example, if gas in America were to go up tomorrow by $0.
50 a gallon, it is not like Americans can just start substituting water in their gas tanks.
The result would be that Americans will just buy the same amount of gas, albeit, they will show their displeasure to those they buy their gas from.
This only goes to show our dependence of cheap energy like gasoline.
The consumption of gasoline is dependent very much on the price of gasoline.
If there is a surplus in the production of gasoline, the result would be lower prices for consumers.
If the goals are to keep gasoline prices cheap, then one of the goals would be to alter one of the factors that could shift the Supply Curve rightward, like increasing the number of suppliers.
This of course, this is dependent on the fact that there is enough crude oil available to be extracted from the ground or under the oceans.
As pointed out earlier, there are more suppliers in the Gulf Coast region than other regions, and coincidentally, gasoline prices are cheaper.
Other factors that can help decrease the price of gas is simply increasing the supply of substitutes and creating better technology for harvesting crude oil.
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