alpar80

Why is it when oil prices go up you see a direct increase at the pump. Now that oil is almost $90/barrel, why is gas still up in the mid $3/gal? Does anyone else wonder this, its quick to go up but long to come back down....

seafeye

There is a mathamatical formula for it. Maybe you can google it. But the oil companies say that when oil goes above 100/barrel they subsidize the gas. They understand that the US public cannot afford to pay $5/gallon but since we have proven that we will pay $4 they will stop it there. Local gas stations may increase it above that if they want to. Prices have to have a certain % markup to stop large oil companies from cutting prices to drive the small mom and pop gas stations out of business.
Oil will have to be below $70 in order for gas to be below $3/gallon.
Just for extra info. Out of one barrel of Oil they can extract 19-20 gallons of gas. The left over is used for oil. China uses theirs to feed their young.
Are the gas companies ripping us off? Yes. but it seems washington is too concerned with bailing out wall st. I think if gas went back to $1/gallon the economy will be much better off. Ever wonder how much of your grocery bill is for transportation costs? 45%.

ToiletDuck

Well you don't see a direct increase because oil goes up. Usually takes up to six weeks. When you see the direct increase, like recently, it's because refining capacity was limited(IKE).

When oil goes down the prices follow. When you see the price per barrel those are contracts for the future. Not immediate which is why it takes a few weeks to go down as well as up. The price might be down right now but we have to go through the $100+ contracts that oil was at very recently.

Gas should be below $3 per gallon right now however the price to manufacture the oil has increased dramatically due to refining limits. If we want the price of gas to come down we need new refineries.

BlueMoon

It takes a while, to get the oil purchased at this price from the well to your gas tank. Normally the price you see is for the futures preceding month (Nov)

Don't forget the fact the gas station people pay attention to the news and see a jump in prices and may be apt to increase their prices quicker, and decrease them slower especially if there is limited competition (they are the only gas station on that corner or are near and expressway). Gas stations don't make much money off gas, they make money off the crap they sell inside.

ERJFO

Google "crack spread"

HercDriver130

Well if the oil companies are ripping us off... then hell lets think about that. Lets say.... 3.40 a gallon for a petro product that has to be FOUND, pumped out of the ground, delivered ( in many cases thousands of miles if not half way around the world ) , refined, shipped to a storage facility, then shipped to your local gas station, then a facility exists to pump it into your car.... all for 3.40 a gallon...... ( FWIW, I hate paying 3.40 a gallon for gasoline ) yet everywhere you look hell they sell water at ball parks for 1.50 for 16 OUNCES.....and there are thousands of other examples.....

GASOLINE is not a right.... its a product like any other and market forces will determine what people can stand to pay. The actual profit stream from gasoline sales at your local station are actually quite small...as someone said above.... they make more on the crap you overpay for inside. When you buy that 16 oz coke for 1.39.... thats freaking sugar water... with a huge profit margin ( hell adjusted thats like 10 bucks a gallon for cola ) the retailer is probably making as much off that as he does off of 4-5 gallons of gasoline.

dbo861

Gas is $2.93/gal here in Iowa. A year ago I would have thought that was outrageous, but now I'm couldn't be happier it's below $3.00.

Laxrox43

Alex, we have been bud's for some time...so I know you can 'get' the sarcasm when I say, "Because they can..." That's all there is too it my friend.

cfii2007

Gasoline will be priced at a level that the market can sustain. It peaked a few months ago, and when demand began to fall off, prices decreased.