AW editorial: Why are gas prices up when oil prices continue to drop?

AlwaysWrite

AlwaysWrite

Addicted Member
An April 11 headline in Newsweek stated "Gas prices are not falling under Donald Trump. They are actually rising."

And that's true. A month ago, on March 13, the average price of a gallon of regular cost $3.08 and today (April 13), the price stands at $3.19.

But how does that logically compute? The price of a barrel of crude oil stood at $66.90 on March 13 as compared to $61.50 today.

Over time, a number of Americans have noticed that even a spike of a few cents in oil prices has led to almost-immediate increased costs at the pump, while prices are slow to come down after decreases in barrel-of-oil costs.

Donald Trump made bringing down "the cost of everything" a cornerstone of his campaign, during which he vowed to lower energy prices through deregulation and boosting domestic production.

Crude oil prices make up more than half the total cost of what drivers pay at the pump, so a drop should positively impact gas prices, benefiting drivers, but why isn't that the case currently?

There should be a simple, clear-cut answer to that question, but what is it?
 
You’d think that if crude oil prices go down, gas prices should follow pretty quickly—but it doesn’t always work that way.

One big reason is timing. The gas that’s at the pumps right now was probably refined and delivered when crude prices were still higher. So stations are selling off that older, more expensive inventory before the newer, cheaper supply kicks in? That lag can make it seem like prices aren’t responding, even though they will—just not right away.

Also, this time of year complicates things a bit. Refineries are switching over to summer-blend gasoline, which is more expensive to produce because of environmental regulations. That seasonal change often bumps prices up, regardless of what crude oil is doing.

And then there’s the bigger picture—global factors like refinery outages, geopolitical tensions, or even market speculation can all impact gas prices too. So while crude oil is a major part of the cost, it's not the only factor, and it doesn’t always dictate the price at the pump in real time.

So yeah, totally valid to wonder why the math doesn’t seem to add up. The relationship between oil and gas prices is just more complicated than it looks on the surface. And then one must wonder WHY we sometimes get a 10 cent decrease, or more. HHHHMMMMMM
 
Greg T. said:
One big reason is timing. The gas that’s at the pumps right now was probably refined and delivered when crude prices were still higher. So stations are selling off that older, more expensive inventory before the newer, cheaper supply kicks in? That lag can make it seem like prices aren’t responding, even though they will—just not right away.
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Dear Greg T:

On the other hand, how does that explain why INCREASES in crude oil ptices are reflected at the pump almost immediately?
 
AlwaysWrite said:
Dear Greg T:

On the other hand, how does that explain why INCREASES in crude oil ptices are reflected at the pump almost immediately?
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Greedy station owners. I've experienced this all of my life. Back in 1980 I had my own service station and kept track of fluctuating prices because of the roller coaster market at the time. I was leasing my station from the fuel supplier and HE would set the prices at the pump. I made 3 cents a gallon regardless. I watched as the oil rose and he'd change the pumps the next day. Then there would be a drop but it took a week for the pumps to change. Didn;t take me long to figure it out. Fast forward to present day; We have a local station that suddenly jack their price up about 20 to 30 cents above everyone. The price would stay there for a few hours before dropping below the starting point. Within a couple of hours all the stations would equalize. That one station would knew there was a drop coming so they'd inflate for a few hours to get some windfall before the drop.
 
UPDATE: As I post this, the crude oil furtures price has fallen to $59.85, but ...

THE AVERAGE PRICE AT THE PUMP HAS DROPPED ONLY ONE CENT, to $3.18!

So again, WHY? Oil prices keep falling, yet NO RELIEF WHATSOEVER in the cost of a gallon of gas!
 
ANOTHER UPDATE: Just in the last 8 hours, the crude oil futures have dropped ftom $59.85 to 58.16 and falling fast!

... but if it goes back to above $60 (or even higher), watch how fast the price at the pump increases!
 
Greg T. said:
Greedy station owners. I've experienced this all of my life. Back in 1980 I had my own service station and kept track of fluctuating prices because of the roller coaster market at the time. I was leasing my station from the fuel supplier and HE would set the prices at the pump. I made 3 cents a gallon regardless. I watched as the oil rose and he'd change the pumps the next day. Then there would be a drop but it took a week for the pumps to change. Didn;t take me long to figure it out. Fast forward to present day; We have a local station that suddenly jack their price up about 20 to 30 cents above everyone. The price would stay there for a few hours before dropping below the starting point. Within a couple of hours all the stations would equalize. That one station would knew there was a drop coming so they'd inflate for a few hours to get some windfall before the drop.
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Huh? Station owners make little in the sale of gas. I know two people who owned gas stations. They make 5 to 10 cents a gallon. Their money comes from cigs and drinks. I don't think .10/3.2O is being greedy. I have no idea how gas stations operated in the 80s, but today station owners don't make anything off of Gas. Costco and Sam's pretty much sell at cost, hence 10-20 cents cheaper
 
AlwaysWrite said:
ANOTHER UPDATE: Just in the last 8 hours, the crude oil futures have dropped ftom $59.85 to 58.16 and falling fast!

... but if it goes back to above $60 (or even higher), watch how fast the price at the pump increases!
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Gas prices have never been that reactive to crude prices. It's usually a few days to a week. Again, refineries are in the middle of switching blends.
 
Djarum300 said:
Huh? Station owners make little in the sale of gas. I know two people who owned gas stations. They make 5 to 10 cents a gallon. Their money comes from cigs and drinks. I don't think .10/3.2O is being greedy. I have no idea how gas stations operated in the 80s, but today station owners don't make anything off of Gas. Costco and Sam's pretty much sell at cost, hence 10-20 cents cheaper
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Most stations today are corporate owned. Ma and Pa shops are nearly a thing of the past. The station managers don't even change the prices anymore, it's all done at the corporate office with a computer. In fact, I can't think of one private station around my entire area. Like I said, in the 80s I made 3 cents a gallon regardless of the pump price. That's why I had to push oil changes, belts, hoses, full service at the pumps, etc.
 
Djarum300 said:
www.gasbuddy.com

The Difference Between Summer-Blend and Winter-Blend Gasoline

We’re talking about the cost differences between summer and winter gasoline along with how to save money on your fill-up.
www.gasbuddy.com www.gasbuddy.com

This is a good explanation here. Again, crude goes down while the cost of the new summer blend goes up.
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Dear Djarum300:

I realize that "summer blend" will cost more, but that increase SHOULD be in the 10- to 15-cent range, and such increase shouldn't begin to explain the situation(s) I'm talking about.
 
When I posted 24 hours ago, the crude oil futures price stood at $59.85. As I post this morning, the price has dropped to $56.40 -- a drop of another $3.45!

Shouldn't the price at the pump be at least SLIGHTLY on the way down? I undertsand the points that some of you have made. However, I've followed the situation for years, and MANY times, even a few-cwent increase in crude futures has resulted in higher prices at the pump within days, and certainly no longer than a week!
 
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Keep in mind the scale of the charts are different. .

This is data for Alabama. Gas has fallen 13c since the beginning of April.

From the 20th of March to the beginning of April, crude went up 3 dollars with an 18c increase in gas prices. This is a 6c per dollar of crude.

The of fuel prices per cost of crude was alot more than the the average here (Feb 1 crude was the same price as April 1 crude). So the question isn't why the fall of crude isn't affecting the fall of gas (it is) but why was the increase in gas prices outpacing the increase in crude in March?

One guess:

Also, two California refineries are set to close as well.
 
FINALLY! A few days ago, the price at my most-frequented station took a big tumble to $2.77, and yesterday, it was down slightly more at $2.74!
 
I bought diesel for my Chevy Colorado Duramax for $2.819 today. I haven't seen a price that low in years.

I filled up. Had I the ability, I would have filled the bed of the truck. Hell, the cats would be drinking diesel at that cost.
 
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