Crude oil goes up gasoline comes down? Dosent make sense..?

Question

Right now how can gas prices be dropping when oil is up over $80? In my idea in manufacturing, when the price of your materials goes up you increase the cost of your product.. And alot of smartasses say the the high prices of fuel is simple economics. Which I dont understand.. Usually the more you sell of something the less it costs. Look what a TV used to cost.. Now theyre giving them away for next to nothing..

Answer 1

Crude prices are listed as $80/barrel, meaning 42 gallons of crude oil costs that much. This is for "sweet" crude, by the way, which is easier to refine than other grades, such as "sour". Of that 42 gallons, only 19.5 is refinable as gasoline. The remainder "cracks" into different products, like chemical feedstocks or heavier grades not suitable for fuels.

In addition, refining gasoline means that other products can't be refined. if a refinery is producing gasoline, they can't produce home heating oil or diesel fuel. This affects teh cost of products as well. Then there is the matter of supply and demand. If there is a lot of fuel in a given market, supply is said to be outpacing demand and consumers aren't buying it as fast as it's coming in. This will put downward pressure on prices. (Incidentally, it's not happening very often. We use as much as can be made...) If demand outpaces supply, there isn't enough fuel to go around and price pressures move up. It's just like when a disaster hits and people are willing to pay $10 for a gallon of milk. The government prevents this by monitoring price gouging, but it's the same concept. Fuel producers try to produce enough to satisfy demand, just like TV makers do. Nobody wants 2 million TV's sitting in a warehouse somewhere, but everybody wants to be able to buy the TV they want to buy.

The reason prices haven't dropped is because there isn't enough refining capacity in the US. While TV makers could flood the market if they wanted, it's all fuels refiners can do to keep pace with demand lately. If one refinery has to shut down, it affects the entire region's supply and prices will spike. This is why prices went so high this spring. There were some freak accidents that caused refinery issues and there simply wan't enough gasoline to go around.

Further, pricing strategies play into street prices as well. It may be that prices in your area were higher than normal and are correcting to a market norm.

There are many factors that go into the price of a gallon of gasoline.

Answer 2

Retail gas prices are dependent on more than the price of crude oil. The price for refining oil into gas also varies, and their is the effect of speculators in the market. Nothing is as simple as economic theory suggests. It happen from time to time. For some past data see.
http://angrybear.blogspot.com/2007/05/high-gasoline-prices-and-refineries.html

Your analogy to TVs is not correct because there is no limit on the raw materials needed to make TV's and there have been vast improvements in the technology, neither of which is true for gasoline. Unless some large source of oil is discovered we will run out of oil in less that a 100 years at the present rate of use.

Answer 3

Gas prices are dropping? could have fooled me... the price of oil and gas are dependent, but there are many more powerful influencing factors. People speculating that the price of oil will rise will make gas prices go higher. I remember when gas was $1/gal. I doubt i will see the day when it goes below $2/gal like just a few years ago. there are no new refineries opening so supply cant keep up with demand for much longer. Unless we figure out a better system, America especially will go into a recession, probably a depression when people cant afford to fuel up their cars any more.

Answer 4

If the try this is going to basically be a splash. that's the regulation of grant vs. call for. maximum folk will decide the thank you to pay for it. we've extensive gasoline guzzling Suv's that I see on the limited-get right of entry to highway continually with ONE person in them! I somewhat have people I artwork withthat holiday motorcycles to artwork over 15 miles! And holiday the elevator up with the guy who drove a million/2 mile in his Hummer! loopy! There are too many factors going into the value of oil. there is usually a million family contributors interior the middle East it is raking in billions according to 3 hundred and sixty 5 days whilst they pay little or no to the employees who do the grimy and hazardous jobs to convey it too us. that's what bothers me greater that the value. i might sense greater appropriate if I knew the sector workers have been making stable money for what they do to grant this plenty mandatory comodity for us. and that i might wager all politicians have invested heavily in oil. right here they throw Martha Stewart in prison for insider buying and merchandising while they have get right of entry to to all the worlds production and understand how their own judgements influence the value. isn't that a form of insider buying and merchandising? i grew to become into as quickly as advised some years in the past a farmer close to my Grandpa had invented a tractor engine that could desire to run on section Water! i'm no longer able to bear in mind the ratio, a million/2 and a million/2 or 70/30 or some thing. He went to patent it and the government took him away and set him up for all times someplace removed from all of us who had considered it and he grew to become into in no way allowed to speak approximately it! Water is one ingredient that could no longer be controlled so the government has no way of taking good thing about it. i grew to become into despatched a video awhile decrease back of a few else who discovered the thank you to cut up the water molecule and pull out the Hydrogen for gasoline. they had a small generator engine that ran fullyyt on water! They too dissapeared i think of because of the fact the link i grew to become into despatched now no longer works. all the hype appropriate to the gasoline companies or oil companies placing the value is incorrect. the value of oil is set with the aid of a small group of fellows in long island. They settle on what the call for would be and adjust it for this reason. so as that they on my own settle on whay we pay.