Gas prices?? What's the REAL story???

Question

I've been watching the market now for a while concerned about oil. I see that the barrel has been coming down just about everyday now, some days over a dollar a day. But there is sill no significant impact at the pumps, and gas futures are at 1.63?? Can someone explain how this works... If the barrel goes up the price at the pumps go up 10 20 30 40 cents in a day and the stations will change their price many times in one day to meet that increase, but if the barrel goes down $1,$2,$3,$4 dollars in a week/day we only see pennies lower at the pump. I do not understand what is going on??

Answer 1

Although I am not an expert, this is my understanding. The markets are priced on supply and demand, and the preceived supply and demand. Recently, in the oil markets there has been an increasing demand issue with other countries growing at a rapid pace and requiring more oil. And there is still a limited supply of it (it takes a lot of technology, equipment and oil fields to increase that supply) There has also been a lot of fear in the market that Iran may do something to limit our supply of oil. This has made the price of oil higher...although coming down now that the fear is lessening and people are becoming more conservative (but regardless, demand should only increase as these other countries grow). As for the gas prices, they are somewhat based on the price of oil as oil is refined to make gas. There is a lag time for you to see the prices change at the pump...believe it or not, even on the upside. But your local gas station gets refills several times a week (and other stations get their refills on different day of the week also, and he watches these prices also). When the prices are volital, he has to keep a keener eye on the prices in the market so he can adjust his prices accordingly. He may not adjust on the downside so quickly as he may have paid a higher price a few days ago and still needs to make money on his gas, but as prices come down, he does adjust accordingly, otherwise he is "price gouging". The oil companies really can not control the prices as this really is priced in the market. But they have made greater profits because their profits are from margin....if the price of oil is 50$ a barrel and they get 2%, they will make less money than if the price of oil is 70$ and they still get the 2%. There are seasonal fluctuations as someone pointed out, but it is because there is more demand in the summer and less in the winter. But again, because of the lag time, you should see prices coming down soon. I know I've been seeing them come down already. But still, please push our government for cleaner, better fuel sources so we can get away from our dependency on oil (which probably will continue to become more expensive) and so our energy sources are not dependant on the middle east. Hope this helps your understanding!

Answer 2

There really isn't a conspiracy.

In any free market, price is determined by supply and demand (Econ 101).

In addition to natural GAS, gasoline prices and oil prices and most other widely used commodities, are set on the futures market. Each individual region determines their costs of refining and transportation, etc., and passes on these costs to the wholesaler. The retailer has similar costs added.

But if there is a shortage, or "perceived" shortage (cut in supply), then prices will go up, same if there is an increase in demand.

Are you old enough to remember the Oil Embargo in the Seventies, when people were lined up at the pumps? People do strange things when they think they're going to run out of something.

Often, market pricing is based on human emotion, and not very logical at all. But that doesn't mean it's being manipulated, controlled, or under the forces of conspiracy.

I'm a Petroleum Engineer, but was pushed out of the industry in 1980's when the price of oil hit $10/bbl. They said that would never happen again, but it did, in 1998 also. Nobody thought that was a conspiracy, when my whole career and future was being flushed down the toilet and half of corporate Oklahoma and Texas was being decimated. But somehow, when prices go up, that's manipulation.

Answer 3

First, Prices at the retail level are sticky, they are still working off the inventory aquired when prices were higher.
Second, You are buying GAS not Oil, and the price of oil only makes up a fraction of the the total cost of unleaded gasoline. The Most significant factor is a Refinery Shortage. Rifining is at full capacity so even if the price of Oil dropped to 5 bucks, you would NOT see a whole lot of relief in Gas prices, in other fuels that are lightly rifined you would. There has not been a new rifinery built in the US since 1971, and there are only a few left operating. Additionally, there are now putting ethanol in Gas to reduce emmisions, and we are comming of a big shortage that has pushed gas prices up.

Answer 4

Ha ha, silly silly person. Summertime equals Gas hikes, Fall equals holidays coming, so lets just let them spend some money at the Retail level, then in Winter, after tax time, lets make automobiles less expensive looking. Spring time, lets see what our tax money will buy us.....oh my, look at the price of gas again!!
Come on, this is always just a vicious circle/cycle, oh and lets not forget the "Gulf of Mexico" gas find, eh?
Like that was just a miracle or something!

Answer 5

My boyfriend said, gas prices vary every 4 months. Jan - April it is raising almost up to 50cents more. May - August It is pretty steady, 10 to 15 increase or decrease. September to December it drops about 50 cents. I think the Government is playing with us. Christmas is coming and so they want us to spend our money on gifts, so they lower the price of Gas so you can afford more money on spending!

Answer 6

Go check out the profits of the gas companies. remember, prices anywhere always go up faster then they do down.

People are greedy and then there is economics.

High gas prices actually helps control demand. I guess you don't remember the 70's where we had even and odd days to buy gas and we had to stand in line sometimes for hours to get gas. The high gas prices are better.

Answer 7

at the same time as the cost went up, the decision for went down all over the realm. to boot, i imagine that the election of Obama contained in the U. S. has had a chilled result on the Mideast. warfare is plausible with Iran or Pakistan yet a lot less in all probability than if McCain had gotten elected. Tensions in those parts have an result on the cost of oil.

Answer 8

That's why if your in California vote yes on 87!

why would the gas people lower , the prices if you're willing to pay 3.10 for a gallon of regular? I wouldn't

Answer 9

Greed.

Answer 10

when the goverment threatens to investiage it gets lower