In U.S.A, during May, 2008 the average gas prices reached $4.00 a gallon, and in some places this price level was also crossed, these were extremely tiring records. But for American consumers this was not a new thing. In May 2008, prices continued to rise till the end of the month. For this reason May, 2008 was considered as a month of price records that broke one after another. 
Gasoline keeps America moving, it is considered as the bloodline for America. Their prices are continuously fluctuating. They are a little down one month, rises the next month, and then in a year their prices shoot up more than 50 percent. Moreover these gas prices are different for different countries and even if you compare the gas prices of two states or cities you will find much difference in it. When we have noticed such a price difference among the gas prices then a question comes in the minds of most of the people that how gas prices are determined. Let us talk about the forces that determine the gas prices.
Americans have a great need for gasoline that must be satisfied. If we look at the amount of traffic on roads and highways, we will realize that a severe gas shortage would cause a serious damage to the United States. According to the Motor and Equipment Manufacturer’s Association, the total drive done by Americans is nearly 3 trillion miles per year, (source: MEMA). That is almost equal to 820 trips from the sun to Pluto and back.
According to the Department of Energy, in U.S.A. about 20 million barrels of oil products are consumed per day (bbl/d), (source: DOE). Out of which, almost half is used for motor gasoline. The rest of the gasoline is consumed for distillate fuel oil, jet fuel, residual fuel and other oils. There are 42 gallons (159 L) of oil in each barrel, which yields 19 to 20 gallons (75 L) of gasoline. So, in U.S.A, almost 178 million gallons of gasoline is consumed every day.
Expectedly, during the summer the demand for gas spikes, due to the reason that lots of people might be enjoying their vacations. During the summer, logjams of tourist traffic are usually created on Holidays like Memorial Day and the Fourth of July. This high demand usually leads to higher gasoline prices. Prices can also be increased due to Cleaner-burning summer-grade fuels, which are comparatively more expensive to produce, but it is not necessary that prices always rises in summer. For example, gas prices rises sharply to 31 cents in April and early May of 2001, reached up to $1.71 per gallon which is quiet inexpensive as compared to today’s prices, in reality prices falls during the 2001 summer.
In 2004, due to so many factors the prices continued to rise till the end of the summer travel season. The main factors were several hurricanes that hit U.S.A. and a huge increase in crude oil prices. In 2005, these factors pushed the price level to $3.07 per gallon on September 5. However these prices were settled down to a little extent in November and December of the same year.
But today the prices has attained a level that is far above than what it was in 2005.However a recent drop has been noticed in prices and the price for a gallon of a regular gas was at an average price of $4.06 for a gallon in July 2008(source: EPA). It seems that due to the fact that prices have broken all the previous records, the people have tried to drive less, this cause the decrease in demand and so the prices falls.
Generally the prices increases due to the lowered inventories of world crude-oil market .It may also be due to the fact that the overgrowing demand causes the refinery capacity to get outpaced. Usually during the spring, refineries perform the necessary maintenance, which can create a shortage of gasoline and have a great impact on gasoline prices. By the end of May, refineries complete their maintenance work and come back to their full capacity.
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Thanks for the info…