Gas prices are slow to follow oil prices

Posted August 19, 2011

Gas Prices

— A dramatic change in oil prices isn't an indicator that gas prices will immediately shift.

After a dip earlier this week, oil prices began rising again on Friday as investors assessed the global economy and the dollar weakened. The national average for gasoline was unchanged at $3.585 a gallon on Friday. AAA says that's about 10 cents less than a month ago.

Steve Byers, owner a Grocery Boy Jr.gas station on Lake Wheeler Road in Raleigh, said the oil news can be a little misleading.

"It may be sitting in a harbor in Saudi Arabia, (and) it takes a while before it gets here and gets refined," Byers said.

Once the oil is refined into gas and put into Byers' tanks, he has to manage the inventory. 

"You have to reflect that almost right away. You can't take a loss," Byers said.

The same is true when gas prices fall.

"If we still have 15,000 gallons of gas in the ground, and some comes in that's cheaper, we still have gas in the ground at old prices," Byers said.

Some economists say that another reason gas prices don't go down is simple competition. When wholesale prices rise, retailers who don't raise the price quickly lose money.

Gas prices can be slow to follow oil prices Gas prices can be slow to follow oil prices

When the prices fall, they try to make up for those tight margins by squeezing extra money out of every gallon.

Other economists believe that when prices fall, consumers stop shopping, and that reduces competition.

Wake Technical Community College student Juliana Ajibolade just wants gas prices to go down.

"Sometimes, I want to go shopping, but I can't because I have to put my money (aside) for the gas. Sometimes, I want to get food, but I can't because I have to put my money toward the gas," she said.


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  • Made In USA Aug 19, 2011

    I bet oil companies have control of at least a quarter of America's money. Just figure, $3.65 is spent on EVERY gallon of gas sold. Multiply that by say 15 gallons a week per American that owns a vehicle. We're talking MEGA-BUCKS!

  • Made In USA Aug 19, 2011

    I don't blame the retail gas stations for the high prices at the pumps. Maybe a little.....BUT...

    Next in line are the DISTRIBUTORS. Now we're getting closer to the big boys. Retail gas sellers are their puppets. This is where the prices are adjusted daily. The distributors set the prices at the pumps. Retailers pay the current market price.

    Next in the path of these dollar filters are the big oil bosses. Now we are getting hot. I think its these guys that are like locomotives on a train. Whatever they say to charge, the others follow. And because of the fact that all of the BIG OIL COMPANIES ARE RICH, it they that control how much we must sacrifice out of our wallets at the pumps. They're greedy, wealthy, and have complete control of a large portion of our money.

  • Rebelyell55 Aug 19, 2011

    The only America enjoys a low fuel cost is because we use a very high amount. When the demand drops, the cost goes up.

  • Rebelyell55 Aug 19, 2011

    This one is very old. Raising oil prices have very little to do with gas prices going up or down. Don't know where they are getting their information from. There is a lot of other factors that drive the gas prices. One is how much they think they can get by with. Gas price have not dropped nor will they drop, oil prices are going up. The current price we pay now is the norm, and will be hopefully until 2013. By then it'll be over 4.50 a gallon and that will be the new norm.

  • Made In USA Aug 19, 2011

    Dark Horse, the comment you quoted is one of two below. Read my second comment.....

  • sanacito Aug 19, 2011

    Funny when the price per barrel of oil goes up, my neighborhood gas station raises its prices at the same time. Almost as if they have a little ticker inside the store or they're watching CNN. However, here we have a dramatic drop in the price per barrel and the gas price has gone down 3 cents.
    You can't fool all the people all of the time. We're getting ripped off.

  • Dark_Horse Aug 19, 2011

    It makes sense that gas prices can be slow to come down when oil is already costing less. Barges move slowly. Refining it takes time. This makes sense.
    Made In USA

    Work for the oil industry, huh?

  • Dark_Horse Aug 19, 2011

    "Once the oil is refined into gas and put into Byers' tanks, he has to manage the inventory. If the gas in the ground costs him $3 a gallon, a new shipment costs $3.20 a gallon."
    "If we still have 15,000 gallons of gas in the ground, and some comes in that's cheaper, we still have gas in the ground at old prices," Byers said."

    So basically they get us when it goes up and when it comes down. You won't give us the cheap gas that you already bought because the next shipment will be higher and you won't give us the lower price of the newer shipments because you have the expensive stuff in the ground still...

    This is a unfair racket that will continue until an alternative can be provided.

  • Made In USA Aug 19, 2011

    Now, explain this to WRAL Super-Tanker Owners...

    If newly-bought raw crude oil takes about a month to get to the pumps as stated above, then why do the gas pump prices go up [sometimes within hours] after the price of a barrel of oil goes up? Could it be because these wealthy boat owners have double standards thanks to greed?

    I still say you are milking our wallets.

  • shawnwilliams159 Aug 19, 2011

    Where are the Congress and Senate demanding answers to this price gouging? Oh I forgot, in the back pocket of Big Oil. Never mind......