There are 159 liters (42 gallons) of oil in a barrel, and a refinery can produce between 1.78 and 2.54 liters of gasoline from 3.8 liters (1 gallon) of crude oil. A barrel of oil will also produce approximately 64 liters of other useful petroleum byproducts, such as plastics, propane, and ammonia.

Today, 62% of the world’s readily accessible crude oil is found in the Middle East, with the major players being Saudi Arabia, Iraq, Kuwait, the United Arab Emirates, and Qatar. There are four main factors that regulate the price of this valuable oil.

a) Availability or supply of crude oil

b) Oil consumption rate

c) Financial markets

d) Government policies and regulations

Fundamental economics dictates that a high supply of oil will translate into lower demand, which in turn will lead to low prices, and conversely, if we have a low supply of oil, this will lead to high demand, and in turn, higher prices. It is with this basic concept that oil is traded on the financial market. An oil speculator invests in oil futures, essentially betting on how much oil will cost at a future date. Government policies and regulations also have a significant effect on oil prices, for example, laws designed to prevent climate change are enforced through taxes, and this raises the cost of gasoline for the consumer.

An important factor that also governs the price of crude oil is that for the last 50 years it has been quoted in US dollars, so fluctuations in that currency can cause movements in the cost of buying a barrel of oil. Recently there has been talk of switching from a transaction denominated in US dollars to the euro or a basket of currencies. Whether this will work is yet to be determined.

Finally, we would like to end the discussion on prices by mentioning that in the year 1956 a geophysicist named Hubbert theorized that the world would eventually reach a maximum level of oil production, and he coined the term “peak oil”. Once this level is reached, the world will begin to slowly deplete its oil reserves and this will cause a dramatic and fatal rise in prices.

So why does gas cost more in the summer? Well, there are a multitude of factors why gasoline tends to be more expensive during the summer months, and one reason is due to increased demand: better weather, resulting in more motorists on the roads. Another key reason is that when the weather starts to warm up, utilities temporarily shut down some of their refineries in order to perform necessary scheduled maintenance, and this can cause supply chain disruptions for gasoline distribution. Another thing to consider is that there are actually two fuel blends: winter and summer gasoline. In the summer, gas stations have a seasonal transition because summer blending helps reduce smog during the summer ozone season that runs from June 1 to September 15 each year. This initiative was launched in the United States in 1995 as part of the Reformulated Gasoline Program (RFG). So how exactly does a summer mix help reduce pollution? Summer grade gasoline contains fuel additives known as “oxygenates” that burn cleaner, and this is helpful in reducing pollution during the summer season. To learn more about crude oil, read this book.