While many people may argue that major oil companies are in for the profit, just like any other commodity supply and demand will have an effect on oil and natural gas prices. This means when there is a shortage of crude oil the prices increase and when there is a surplus of crude oil prices decrease. The rise in oil and gas prices however, economically demanding this may be, can be understood when an individual examines the composition of these prices and realizes that, like any other consumer product, the price paid at the pump is a makeup of several entities all dependent upon various factors, such as the price of crude oil, the geographical area , state , and federal tax laws, cost of refining the gasoline and the demand .After many consumer surveys however , it has been established that the biggest cost is for crude oil .
According to Energy Information Administration as of January 2008 the breakdown of gas prices is as following : Taxes 13% , distributing on and marketing 11% , refining 8% , and crude oil 68% .Diesel gas prices are broken down differently .These prices consist of : taxes 14%, distribution, marketing 9% , refining 15% , and crude oil 6% (EIA, 2008) After reviewing the report, lawmakers are trying to make a law that would limit the percentage of profit from oil, which could make a dramatic change in the reports to come. Many agencies, organizations, and governmental offices may have opinions and suggestions with regard to oil and natural gas prices, but the oil and natural gas industries are regulated by the “Free Market” and while there are many factors that dictate the prices of gas, none are more influential than current affairs and where it is purchased from. Organization of the Petroleum Exporting Countries (OPEC), is an intergovernmental organization consisting of three continents including America, Asia, and Africa (OPEC, 2009) may regulate how much crude oil is exported into the United States, but does not regulate to price...