Crude Oil and the Price of Gas at the Pump

[alpine7822]

I understand that the "price" of oil is based on the price at delivery in the future. But here's my main concern...if the rise in price of crude in the future immediately changes the price at the pump within the same day (i.e. - oil goes up $5.00 and the price at the pump immediately goes up $0.10/gal), then why when oil dips like it has the past 2 days (7.9% overall over the last 2 days) does the price at the pump not immediately fall in the same ratios that it rose?

Seriously, if the rise in gasoline is immediately and directly proprotional to the rise in oil futures, then why doesn't the drop in oil futures have the same effect and drive prices down quickly?

[dave6666]

It's a syndrome known as getting shafted. Look at the profits. They know what they are doing.

[alpine7822]

I agree with you. They never have a comeback when I tell them that the gas they are charging me $4.20 for in the morning is the same that they are now charging $4.39 for the same day...the gas in the tanks didn't change and they didn't get a delivery! Now I only got to stations that try to keep their prices consistent and not gouge as soon as oil spikes or are slow to drop the price.

[musicncars]

amen, Dave. We are getting the shaft. I think its criminal, and we should be able to hold them responsible. Its price gouging and should be illegal.

[dave6666]

I use an Exxon Tiger Mart that basically does the same thing holding price fluctuations to a reasonable roar. In the past 3 to 4 weeks or so, 87 has been holding steady at $3.89. They just finally went up yesterday by 3 cents to $3.92. I don't like the roller coaster crap either. Makes me feel like I need to figure out a way to beat their game, and that's a losing proposition I don't have time for.

[alpine7822]

I try to use Costco as much as I can since they are a good $0.25 cheaper on premium than anyone else, and they use 93 (with ethanol), but not "premium" 92 like some discount places. The only problem is that there is only 1 Costco with gas around here and it's not always practical.

[ViperJon]

Supply and demand no longer applies to oil and gas prices. The oil companies have figured out that they can charge whatever they want with impunity and there is nothing anyone can do about it. People will pay it, they have to pay it. They have to get to work. They can hold back production, make claims of refinery issues and a myriad of other factors to manipulate the market. There has been considerable cut back in gas usage in the US in the last few months, in theory price should go down. But it does not. It will not. Does anyone actualy think oil companies want to build more refineries, or drill for more oil in the hopes of lowering gas prices and cutting their own profits and throats? It's laughable.

[musicncars]

it doesnt matter. if they build refineries or drill more oil, the price will only increase because it costs "billions and billions" of dollars to do that. greedy bastards. im telling you, it may be a free market and all of that s***, but there is some criminal activity afoot, and our government is in on it, otherwise there would be an investigation and the corruption would surface. I think it has with the concerns of the saudis. we just need someone who is not in bed with the gas companies to do something.

[2001 GTS]

I've seen this a lot over the past year where they are quick to raise prices, but not so quick to drop them.

My business runs on roughly 2000 gallons of diesel a day delivered to our tank and we have to follow the price of crude oil religiously to not get shafted with its fluctuations. Ex: one day the delivered price is 4.40, but the next day its 4.30, the public diesel pumps stay high while the station makes 10 cents more a gallon profit.

[ViperJay]

there is a lag in between the price of crude and the price of gas. obviously, there is a massive spec premium built into the price of oil right now that is coming off fast in the last 2 days. gas is priced to about 110 on the barrel. pump prices are raised as local delivery raises. station owners try to keep the pump price fixed with what they are paying upon delivery. there is a quick increase when you see oil shoot up and a lag to decrease and they are hedging their bets on the next delivery charge. remember that the guys that own the stations are only making about a dime per gallon. the good news is that the spec premium for crude is crumbling fast (as long as iran does not launch more missiles) and consumption for distalates is coming down. we should be under 4 at the pumps in no time.

[ViperJon]

You have to love the way oil prices react to the possibilty of something happening in the mideast, even though the reality rarely happens.
How fuucking long has there been "tension" in the mideast, 2000 years?
Oops, oil prices jumped today because the mullah was seen scratching his ass. Speculators took that as a sign of increased tension.