Oil reached $108.76 per barrel on the Brent benchmark by 9 a.m. Eastern Time, down $1.58 from the prior morning and about $44 higher than a year earlier. Oil prices are unpredictable because many factors can shift supply and demand, especially during recession fears, war, or major disruptions. Gas pump prices bundle crude oil costs with refinery costs, wholesaler costs, government taxes, and station markups. Crude oil typically makes up more than half of the per-gallon price, so increases often appear quickly at the pump, while declines tend to show up more slowly. The U.S. Strategic Petroleum Reserve provides emergency crude oil to reduce the impact of supply shocks and price spikes, but it is not a long-term solution. Oil and natural gas prices are linked because changes in oil can shift industrial fuel choices and alter natural gas demand.
"Oil prices are inherently unpredictable. While many variables come into play, the basic push and pull of supply and demand is what ultimately matters. In times of heightened concern about recession, war, or other major disruptions, oil can swing suddenly."
"Each gallon you pay for at the pump bundles together several costs. Crude oil is one piece, but you also pay for refineries, wholesalers, government taxes, and the price markup set by gas stations. Because crude oil usually accounts for more than half of the price per gallon, it tends to move the needle the most."
"Sharp increases in oil almost always show up quickly at the pump. Declines in the price of oil, on the other hand, often translate into slower, more delayed drops in gas prices-the "rockets and feathers" effect."
"When an emergency arises, the U.S. has a reserve of crude oil called the Strategic Petroleum Reserve. Its chief function is to secure energy during disasters like sanctions, severe storm damage, or war. It can also help take the edge off brutal price spikes when supply gets hit. It's not a solution for the long haul."
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