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Gm 545 Project Paper 1

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Submitted By lushaz
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Business Economics GM545 Feb/2012 lynnettehamrick@yahoo.com

The gas prices in my area have significantly increased within the past few weeks. I reside in Silver Spring Maryland and my Nissan Maxima requires premium fuel. The current price at Shell for premium gasoline is $3.999. I'm paying $4 a gallon for gas. Fox five dc news reported that last year around this time, the price for regular gasoline was $3.25 a gallon (http://www.Thepriceoffuel.com). The gas prices lately have not been stable and since the recession started in 2008 the gas has been fluctuating around $4 a gallon for regular oil.

Gas prices fluctuate for many reasons which include the price for crude oil in the world market, supply and demand for gasoline, local competing gas stations, government regulations, and taxes. Crude oil prices are 55% of the price of gas and distribution and tax account for the remaining 45% (http://www.Thepriceoffuel.com). The demand for gas occurs around summer vacation and major holidays where motorist consume the most gas. When people drive less and use other means of transportation like, car pools, public transportation, and bicyclist, this brings the demand down.

The average price in Maryland for regular gas is $3.626 compared to a month ago at $3.416. The highest gas stations in the area our in Montgomery county, where as locations like Baltimore county and Waldorf have cheaper priced gas. Another aspect of the lower prices is that these our locally owned stations in an area of lower income individuals. These local stations can change their prices to keep up with its competitors (http://www.Thepriceoffuel.com). Since their prices our lower then competitors the demand is greater because consumers assume their getting a bargain on gas. There is not an over supply of oil in the market so normally the prices should be lower. Since many

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