Ethereum’s gas prices are based on the computational power needed to execute a transaction or contract on the Ethereum network. The higher the gas price, the more “fuel” is needed to complete the transaction, and the faster it will be processed.

The gas price is not constant; it depends on the current demand for processing transactions on the Ethereum network. When there are more transactions than there is processing power available, the gas prices go up.

This is because miners (the entities that process transactions on the Ethereum network) are more likely to prioritize transactions with higher gas prices.

The amount of gas used by a transaction or contract is also a factor in determining the gas price. A transaction that uses more gas will require a higher gas price to be processed in a timely manner.

To summarize, Ethereum’s gas prices are based on the computational power needed to execute a transaction or contract, the amount of gas used, and the current demand for processing transactions on the Ethereum network.