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Old 08-11-2011, 03:51 AM
 
Location: Manassas, VA
1,559 posts, read 3,172,305 times
Reputation: 839

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How come when the cost of oil per barrel rises, it is pretty much immediately reflected in the cost at the pump. Yet when it goes down....ummm....it's gone down A LOT from $110 a little bit ago...yet we are still paying a premium. It's reduced....but never back to where it was, not even remotely. Anyone wonder or get upset about this?
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Old 08-11-2011, 05:58 AM
 
Location: Arlington, VA and Washington, DC
23,573 posts, read 33,307,098 times
Reputation: 32138
Quote:
Originally Posted by vermonter16 View Post
How come when the cost of oil per barrel rises, it is pretty much immediately reflected in the cost at the pump. Yet when it goes down....ummm....it's gone down A LOT from $110 a little bit ago...yet we are still paying a premium. It's reduced....but never back to where it was, not even remotely. Anyone wonder or get upset about this?
Well, I'm upset but what can you do? Yesterday near my job in Louisville gas was $3.39 which is considerably lower than weeks ago. It used to really be painful when I had a 40 mile commute. It got to the point where paying rent here in Louisville would make more sense than paying for gas. Our attorney general here in KY has tried unsuccessfully to accuse gas carriers here in KY of gouging prices. You just gotta accept it is what it is.
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Old 08-11-2011, 06:30 AM
 
Location: Falls Church, VA
540 posts, read 639,139 times
Reputation: 470
Easy. 2 main reasons

1) Crude oil needs to be refined into usable gasoline. While prices often move in tandem, overall market supply issues and market trading dictate the base price of gasoline (before taxes, profit, etc.)

2) Imagine two stations close to each other. The don't take gasoline deliveries at the same time. Station 1 gets gas when the oil is $90 and prices it accordingly. Station 2 takes gas a few days later at $85 and lowers their price by a bit. Then station 1 has to lower their price to compete, and may be taking a loss (gas station profit margin is slim on gas, they make their money through other convenience store purchases). So, when Station 1 gets a new refill at $80, they may hold the price where it was (even with the other station) in order to make some profit in order to smooth out the ebb and flow of the market.

There really aren't many true gouging situations as long as there is a competitive marketplace. The problems come when there are few stations (like downtown areas, or near airports) or when some group has a virtual monopoly on stations in an area.
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Old 08-11-2011, 06:42 AM
 
Location: Manassas, VA
1,559 posts, read 3,172,305 times
Reputation: 839
True - but every quarter the oil companies have record profits. We were seeing the prices we are now when oil was in the $90s - $100 per barrel. Even after it slipped down to the $70s....no big change. Now we can say that they change the price when the gas truck comes to fuel them up....but I see a daily rise in prices when oil is up....but not a daily decline when oil is down. I think that's my point.

I'm not sure who to write, whether it be the state politicians or what. But I think the mentality of 'that's just the way it is' is the reason why the oil companies continue to make record profits above and beyond quarter after quarter.

If everyone started saying something...it might at least force something to happen. At least we can say that we tried instead of just accepted it. Although I realize that many have tried to do something...and then nothing is done.

I think that around here it isn't as big of a deal when gas increases because we've got more stability in this area with higher paying jobs. But in rural areas were people's pay might be the standard minimum wage this is a real burden on them.

By the way - we have a BP that might change its price three times in a day....I know they aren't getting fill ups several times a day - that's ridiculous. They went from being lower to higher and then back to inbetween in one day (Monday).
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Old 08-11-2011, 07:13 AM
 
Location: Arlington, VA
182 posts, read 475,246 times
Reputation: 113
I completely agree with the OP. Gas stations will immediately raise prices when crude spikes, and take their sweet time decreasing prices when crude falls. I found this link showing the correlation between crude and gas prices..

Crude Oil Price Chart - Gasbuddy Gas Prices

Two major things jump at me after viewing this graph.

1. Temporary dips in crude prices do not translate to temporary dips in gas prices.

2. The last time crude was around $79 a barrel, gas prices were ~2.80/gal. If we don't see pump prices like that anytime soon, then I can rightfully assume we're being hosed.

I also don't feel any sympathy for the gas station owner. When oil started to plummet back in May, all the gas stations in my part of Arlington decided to raise their prices about 10 cents a gallon a few days later. My best guess is they did this so they'd have a higher initial price to start their retail drop from.
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Old 08-11-2011, 07:43 AM
 
Location: Fairfax, VA
1,449 posts, read 2,802,285 times
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I truly, truly dislike oil companies. I WISH we could live a car free lifestyle, honestly - if we had been able to move to Austin, we were going to cut down to just one car (OK, probably more like one nice car and one beater for the VERY rare times I was going to need to drive around, but still). I get mad every time I fill my car up. Our country basically built itself around the idea that gas would always be cheap, and now we're stuck.

I'm just going to leave it at that because otherwise I could rant for hours...
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Old 08-11-2011, 08:48 AM
 
Location: Manassas, VA
1,559 posts, read 3,172,305 times
Reputation: 839
Quote:
Originally Posted by eastli84 View Post
I completely agree with the OP. Gas stations will immediately raise prices when crude spikes, and take their sweet time decreasing prices when crude falls. I found this link showing the correlation between crude and gas prices..

Crude Oil Price Chart - Gasbuddy Gas Prices

Two major things jump at me after viewing this graph.

1. Temporary dips in crude prices do not translate to temporary dips in gas prices.

2. The last time crude was around $79 a barrel, gas prices were ~2.80/gal. If we don't see pump prices like that anytime soon, then I can rightfully assume we're being hosed.

I also don't feel any sympathy for the gas station owner. When oil started to plummet back in May, all the gas stations in my part of Arlington decided to raise their prices about 10 cents a gallon a few days later. My best guess is they did this so they'd have a higher initial price to start their retail drop from.
Good link! Maybe we should send all this information to every politician. We are supposed to be democracy and yet...it is true that we vote a person in because they say what we want them to say - but then they don't act. Most are in the pockets of the oil companies or profitting in some way. They have forgotten what it is like to be the 'regular' guy.

I don't know how to get oil companies to stop playing this game with the average consumer with the exception of calling or writing and calling or writing until our politicians decide to unit to put an end to. Granted - that may never happen...but if nobody does anything...nothing will ever change.

I think we are being hosed because gas isn't going to drop a dollar anytime soon. That is a good observation that the stations would raise the price to give themselves extra cushion. Seems like that is what is happening since prices never go back to where they were depending on where oil is at the time. I can understand a little give here and there but not this much. The next time oil rises - we can see gradual increases again and again...and then when oil goes back down...we won't be at $2.80 or $3.45 - $3.65 (depending on where you live) it will be even higher....
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Old 08-11-2011, 08:57 AM
 
51,690 posts, read 41,630,049 times
Reputation: 32281
Quote:
Originally Posted by vermonter16 View Post
True - but every quarter the oil companies have record profits. We were seeing the prices we are now when oil was in the $90s - $100 per barrel. Even after it slipped down to the $70s....no big change. Now we can say that they change the price when the gas truck comes to fuel them up....but I see a daily rise in prices when oil is up....but not a daily decline when oil is down. I think that's my point.

I'm not sure who to write, whether it be the state politicians or what. But I think the mentality of 'that's just the way it is' is the reason why the oil companies continue to make record profits above and beyond quarter after quarter.

If everyone started saying something...it might at least force something to happen. At least we can say that we tried instead of just accepted it. Although I realize that many have tried to do something...and then nothing is done.

I think that around here it isn't as big of a deal when gas increases because we've got more stability in this area with higher paying jobs. But in rural areas were people's pay might be the standard minimum wage this is a real burden on them.

By the way - we have a BP that might change its price three times in a day....I know they aren't getting fill ups several times a day - that's ridiculous. They went from being lower to higher and then back to inbetween in one day (Monday).
FYI- Their "record profits" are in TOTAL dollars. However, they are also (due to mergers when oil companies were going bankrupt in the 90's) the largest companies in the world. (Whenever I hear people using the phrase "record profits" I immediately know they've likely never set foot in a finance class or are a lying politician which of course is an oxymoron.)

In general, the largest company in the world should have the largest profits (in total dollars). If you go look at the actual profit margins...Garmin, Sprint, McDonalds, GE....basically most every other company has higher profit margins than the oil companies.

Lastly, if you buy $100 worth of gas....about $10 goes to oil company profits and $40-50 winds up in the pocket of the government. So when certain govt. ELECTED officials get heat over the cost of gas....whom do you think they are going to try to deflect blame too?
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Old 08-11-2011, 09:00 AM
 
Location: Out in the Badlands
10,425 posts, read 8,754,460 times
Reputation: 7732
Quote:
Originally Posted by vermonter16 View Post
How come when the cost of oil per barrel rises, it is pretty much immediately reflected in the cost at the pump. Yet when it goes down....ummm....it's gone down A LOT from $110 a little bit ago...yet we are still paying a premium. It's reduced....but never back to where it was, not even remotely. Anyone wonder or get upset about this?
There is a one way check valve in the pipeline...very fast to go up...very slow to drop down.
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Old 08-11-2011, 09:03 AM
 
Location: TX
3,029 posts, read 10,643,962 times
Reputation: 1362
Quote:
The last time crude was around $79 a barrel, gas prices were ~2.80/gal. If we don't see pump prices like that anytime soon, then I can rightfully assume we're being hosed
THIS..so much!!

It's the escalating comfort zone effect. now even if crude fell to 60/barrel most people would be THRILLED with gas prices at 2.99 per gallon.

When it really stated to rise above 2/gallon my husband said no matter what the price of crude, we will never see $2 gas again. People will get used to paying higher rates andthen when the crude price drops all they have to do is drop gas down a small percentage and people will be happy.
We have been so use to seeing and Paying ofr gas over 3/gal that now a drop to just 2.99 would feel great, although in reality gas should be at 2.60 or so.
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