I understand the concept of lag effect, but this seems a little extreme. Does it seem that when the price of oil goes up, gas prices go up immediately? And when oil prices fall, gas prices don’t fall as rapidly? Your feeling is confirmed by the facts. We’ve had quite a roller coaster ride of oil and gas prices this year.
The first chart shows gas prices bottoming around April 1 at $2.38 per gallon. Oil prices were at $48 per barrel. Oil reached $61 per barrel on June 24. That was a 27% increase in less than three months. Gasoline prices rose to $2.80 by June 24. That 17% rise tracked the oil price rise almost to the penny when you take the gasoline taxes out of the equation. The oil companies did not eat any of the price increase in oil. They passed it along to you immediately.
It’s been a different story on the way down. Oil has fallen from $61 per barrel on June 24 to $44.50 today. That happens to be a 27% decrease in about six weeks. Meanwhile, the price of gasoline has only drifted down to $2.63, a miniscule 6% drop. Why hasn’t it dropped 18%? It went up 18% when oil rose by 27%. It seems the oil companies aren’t quite as flexible when prices are dropping. They have executive bonuses to pay themselves. They are so busy firing thousands of employees, they haven’t had time to reduce prices at the pump. The screwing will continue until morale improves.
Today, Costco, Maple Grove, MN – $2.34 / gallon. Lowest I’ve seen it in a long time.
Im glad you pointed this out. I just made an 8 hour(each way) trip last week and I was talking about it. I paid 2.31 per gallon in south GA, which was the lowest I saw anywhere( I live near the coast of central FL, its now 2.35 at the closet place to my house). I was talking about that to my wife, the last time oil was this low, we were paying 20-25 cents less per gallon. what the fuck?
I’ll bet its in the same place as our old doctors and our $2500 in savings!
Or in the “No Fault” will keep our insurance low! place.
Or in the third highest gas taxes in the nation with the worst roads money.
Or, or, or.
They promise and promise but the results are always the same. We get screwed, the promises were lies, and the world keeps on keeping on.
That is where our freaking jobs are too.
Prices tend to be “sticky” (not Stucky, that’s a different issue). They go up quickly and come down slowly. Econ 101, or Econ 1824 for some.
But will we see oil refiner and gas station profits up this quarter, which logically they should be, or will the disconnect between crude oil and pump gas simply disappear somewhere into the matrix? Perhaps in executive compensation and health care costs. That’s what I’d really like to know.
Admin, it’s much, much worse here in CA. DOUBLE profits for refineries! Check this out:
In Portland this morning $3.39 per gallon and holding.
Well if there was less regulation and it was possible for a “little guy” to get into the refining business the prices would drop in CA. Instead you have an over-regulated and over-taxed market which plays to the benefit of BIG OIL.
You reap what you sow.
Jim, if I were you, I would start packing. Questions like this, and you’re on the first bus to FEMA camp. Shhhhhhh……
It s a game. It is called sheeple sex.
In Laramie WY diesel was 2.43 yesterday. Lowest I’ve seen in a while.
Just like Obama talked about a Windfall profit tax on energy companies, Where is it? They make an obscene profit off natural resources. I think it could be an economy booster.And Obama(Mr. redistribution) should be all over this,He gave a speech about it when he first ran for office.
2.89 here in AZ.
For a truer picture you have to factor in seasonal demand and seasonal fuel formulations.
lower gas prices what does the state of Ga do ? raise the fucking gas tax . the statists don’t know how to actually make, project or live by a budget . man I wish I could raise their taxes when I have a household budget shortfall !!!
I have noticed the exact same thing and have kept a log (on my blog) of local gas price versus the price of crude oil.
Also check back in January compared to now. The price of a barrel of oil was over $50 and yet the price of gas was around $2 a gallon in my state. From what I see this price fixing is happening nationwide.
Thanks so much for confirming what I’ve figured out.
Here’s my post:
[NEW CONSPIRACY] How You’re Getting Ripped Off at the Pump…
http://rogerhaeske.com/?p=2392
Roger
Guess what……the demand curve for gas is inelastic……..not all demand curves are created equal……..no matter what the price of gasoline is, you still have to drive 20 miles to work, right? you don’t have much say in that………the gas companies have figured it out, they know the market and you better than you know the market and you…………I’m not going to go into the what-fores and whys……but just know that the price of gas is a function of not only the cost of production but of how much you buy + tax and that the gas companies/distributors/retailers are all trying to maximize their profits (that’s why you’ll sometimes see a gas station with a price 5 cents lower than the same brand a few blocks away…….the cheaper gas station has figured out that they make more money on drinks and chips by bringing you in for the cheaper gas than they would have by making that extra nickle at the pump.)
—I know, Econ 101 right?