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Oil Down, But Gasoline Unchanged

So the price of a barrel of oil drops below $130, but the price of gas at the pump is unchanged.

It has always fascinated me how all increases in the price of crude oil are immediately reflected in the price of gasoline, but decreases take forever to be reflected.

Natural gas also dropped, but that was because the stockpile is increasing faster than “analysts” expected. There is no actual link between natural gas and crude oil, but both go up together. They come down at different rates.

If the price of crude goes up a couple of bucks tomorrow, I expect the price of gas will also go up. It’s called “whatever the market will bear”, but at this point the market is very “bearish”.

6 comments

1 Jack K., the Grumpy Forester { 07.17.08 at 7:01 pm }

…not to fear, the Ol’ Maverick wants to swoop in and lower prices 18.4 cents so the oil companies can raise them 18.5 cents…

2 Bryan { 07.17.08 at 7:48 pm }

We did a gas tax holiday in Florida, but no one noticed. The story was that it was absorbed by a price increase, which suddenly went away when the tax returned. Actually, it did track with a change in crude prices, so it might even have been the truth, but the guys at Tom Thumb didn’t believe it.

3 Michael { 07.17.08 at 9:26 pm }

It’s been going down here. Went up about 12 cents a gallon Tuesday afternoon-ish, to $4.25 for unleaded regular, on average. But started dropping again yesterday, and is now back down to around $4.15 on average.

On the other hand, yes, it’s obviously a ridiculous game that the franchisees play. One of them raises his/her price, and they all follow suit–within hours–and all go to around the same price. Occasionally you’ll see one station that’s a penny or two lower than the average price, and sometimes one that’s a penny or two higher (often because of higher rents or a variation in the local gas tax from one community or municipality to another), but generally, the prices are all in the same ballpark. How, exactly, is this not price-fixing and collusion prohibited under federal law?

I have noticed, however, that there are a couple of stations hereabouts that have taken to waiting to change their prices until, presumably, they have to refill their tanks. That, I have less of a problem with. If the owner has to pay more (or less) to buy the product, then s/he can legitimately pass that price change on to customers. But arbitrarily to change the price of product that’s already bought and paid for, that just seems wrong.

4 Bryan { 07.17.08 at 9:54 pm }

Before Ivan in 2004, the local Citgo changed prices on Tuesday afternoon, with the new delivery. Since then you don’t know from one day to the next what it will be. Regular has been $3.999 for a week after retreating from $4.089 which was achieved in four days beginning at $3.849. They have also gone from a dime’s difference between grades to 12¢.

They still get gas on Tuesday, but the price can change at any time, and, like you say, when one does it, they all do it.

In Florida almost all of the retailers makes a dime a gallon, no matter what the price is.

5 cookie jill { 07.18.08 at 1:45 pm }

They just want to pump the h**l out of our Channel here in Santa Bar-B-Que.

6 Bryan { 07.18.08 at 2:19 pm }

That’s absolutely correct, Jill, they just want to transfer more public property to oil companies. As Badtux already pointed out, it will be years before they can get a rig to do anything about drilling, so there is no connection to today’s problem.

It’s another Republican give-away of public assets.