The Cost Of High Transportation Costs

Of the three forms of transportation, rail has the highest fixed costs, motor carriers the greatest variable costs, and air transport, the greatest variable costs of service and logistics optimization. Starting with rail, the cost structure has the highest fixed cost components, driven by infrastructure and terminal costs. Rail is therefore the most difficult to negotiate a lower transportation cost for, as the fixed costs form an inflexible pricing structure for retail service providers. The quality of rail service varies significantly across nations and regions as well, leading to greater variability in costs when a shipment moves across national and regional boundaries. Given the highly fixed cost structure of rail systems, there is significant room for improvement from an efficiency standpoint. The use of containerization is continually adding to greater efficiencies to this mode of transport (Jennings, Holcomb, 1996).

The state adopted a new regulation on the quality of fuel, thus raising prices of production of the good. Among other things a great amount of additional environmental guidelines have all contributed to sky-high prices. As a result in 2006 gas was 23 cents higher in the state of California than the national average. Other control within the government has contributed to the shut down of many small refineries in the state only 14 refineries remain. Since there are so few refineries in the state, an issue at one refinery will significantly affect the gas

Oil is the product that each and every one of us use. It can be used for fuel, heating and even cooking. The most often known for unstable price is crude oil or gasoline. According to the The Economist, The main reason for price shifts of oil is oversupply. The oil production in Saudi rose 10.3 million barrels per day. This increase is the effect of a new method that I being applied to oil extraction. This method is called fracking, fracking is where they drill into tight-rock formations then gradually turning horizontal for several thousand feet more. This results to accommodations to multiple oil wells. This new approved method of oil harvesting has raised the productivity gains and reduced the cost of harvesting oil.

The fluctuation of gas prices occurs because of a number of factors; the price of crude oil, the price of manufacturing, the price of corn is all tied to the price of oil and the price we see at the pump for gas.

• Elastic, With the local gas stations there is competition for business as the commodity itself has little to no substitute the option of whom to buy the gas from now becomes what is elastic about this precious resource. The necessity of the good is paramount the prices of the gas at particular gas stations become the substitutes, almost phantom products if you will.

While oil and natural gas are fossil fuels that release harmful greenhouse gases into the atmosphere, these energy sources are cleaner than coal, which is on the decline as fracking expands. Indeed, coal production fell thirteen percent from 2007 to 2012, as did nitrogen dioxide and sulfur dioxide production. Moreover, pipeline transportation of oil and natural gas is significantly safer than traditional freight methods, which have devastated many communities around the world and cost millions of dollars.

The demand of gasoline has increased steadily over the last twenty years. In 1981 the U.S. averaged 6.5 million barrels of gasoline consumption per day. By comparison, in 2004 the U.S. averaged 9.2 million barrels of gasoline consumption per day. For most of this time period, gas prices stayed relatively the same. This is because the U.S. refineries increased their production to meet the demand and maintain the equilibrium price. Also during this same time period worldwide demand for crude oil increased 27%. Crude oil producers also increased their production to meet the demand keeping prices the same.

At some point in everyone’s lives, we are affected by the rising gas prices in today’s economy. Natural gas is not a renewable resource, since there is a fixed amount of it trapped in the Earth. However, many people carry the misconception that there is a very limited amount of natural gas, and that we may use all of it up. This isn’t true. The gas shortages of the 1970's were prompted by the government’s lack of faith in the industry’s ability to discover and develop new reserves, not by lack of gas supply. The unfortunate impression left by the shortages of gas in the 1970's caused the people to believe that there was a small amount of gas left. On the contrary, the gas resource base is vast, and probably even

Elasticity of supply is measured as the percentage change in quantity supply divided by the percentage change in price .

Natural gas is one of many energy resources being sought out as an alternative to some of the more pollutant geologic resources used abundantly today. Natural gas is being raved about due to how much cleaner it burns than other traditional fossil fuels, and it is becoming one of the more popular forms of energy because of this trait. It is a colorless, odorless fossil fuel, also known as methane. Today's uses for this resource are heating, cooling, production of electricity, and many uses in industry. It is being combined with other fossil fuels to improve environmental performance and decrease pollution. Overall, natural gas is becoming popular because it is an abundant, alternative

Another type of refining is called polymerization, which is the opposite of cracking in that it combines the smaller molecules into bigger ones that then could be used as liquid fuels.

Gas Prices affected by Geopolitics and Supply problems Along with the demand for oil rising, many disruptions to the supply have created bottlenecks. For example, the war in Iraq has resulted in reducing oil production there, as has also happened in Nigeria due to rebel activity. The continuing nuclear weapons wrangle with Iran, the government increasing its control over industry in Russia, and the oil companies being nationalized in Venezuela has given rise to misgivings about future supplies.In recent years, refining crude oil in the US has also become more expensive, with experts citing two main reasons for this: congressional mandates resulting in shifting towards the production of more environmentally clean gasoline blends, and the oil refineries on the Gulf Coast being devastated by Hurricanes Katrina and Rita in the year 2005. In addition, the production of crude oil in America has also become costlier since the places that have been easiest to drill have largely gone dry.This means that oil companies have to go increasingly into offshore oil producing areas such as the Gulf of Mexico, which cost much more to drill in. With oil companies having to access harder to reach locations, which makes it costlier to produce oil, and simultaneously them being forced to reduce their

With supercritical water extraction and treatment, the heavy crude is upgraded to a medium to light crude that is higher value and can be further refined at more facilities worldwide. In addition, it can be transported and stored using 'conventional' crude infrastructure already in place and leverage that capital and operating investment.

Sour crude is considered unstable and must be stabilized by removing hydrogen sulphide gas from the oil before transporting in oil tankers. Usually crude oil is processed and refined to form heavy oil such as diesel and fuel oil to reduce processing cost (Investopedia US, A Division of IAC 2014).

CO2 is one the gases in the greenhouse gas family and with “a stronger greenhouse effect [it] will warm the oceans and partially melt glacier and other ice, increasing sea level” (Climate Change). As humans continue to emit greenhouse gases into the air it is inevitable that sea levels will raise, temperatures will increase throughout the globe, and ultimately change the climate drastically damaging many ecosystems and impacting the way in which humans live on Earth. Many make the argument that the reason fossil fuels are the primary source of energy is due to their density amount of energy, but there is another source of energy that has energy even more dense than fossil fuels.