gasoline prices

[Boodleboy322]

There’s typically a two to three week lag between the oil refinery’s price to the fuel company. The fuel company buys the barrel at market price from the refinery and sets their spreads accordingly. In other words, what you are paying for at the gas station today reflects the price of crude oil from about 2-3 weeks ago (purchased oil at market price). It generally takes 2-3 weeks for a gas station to empty their deposits and order more fuel. The new fuel shipment will reflect the new buy price at whatever the market price was when the respective barrel was purchased. However, based on that logic, if we look at today’s quote at appx. $96.00 a barrel it would mean that gas should be below $3.00 around the end of the month into the beginning of October. Specifically, about $2.648 using the spreads during the all time high. In my opinion, the consumer is getting gouged.

Thanks for your Reply Epchick!


[QUOTE=epchick;1718074]My dad was saying the same thing the other day. He doesn't understand why gas prices aren't going down when the prices of a barrel of crude oil has gone down a good deal.

QUOTE]

[AGDee]

Originally Posted by Boodleboy322

There’s typically a two to three week lag between the oil refinery’s price to the fuel company. The fuel company buys the barrel at market price from the refinery and sets their spreads accordingly. In other words, what you are paying for at the gas station today reflects the price of crude oil from about 2-3 weeks ago (purchased oil at market price). It generally takes 2-3 weeks for a gas station to empty their deposits and order more fuel. The new fuel shipment will reflect the new buy price at whatever the market price was when the respective barrel was purchased. However, based on that logic, if we look at today’s quote at appx. $96.00 a barrel it would mean that gas should be below $3.00 around the end of the month into the beginning of October. Specifically, about $2.648 using the spreads during the all time high. In my opinion, the consumer is getting gouged.

Thanks for your Reply Epchick!

While this seems like it would make sense, it's not what appears to happen in reality because if a gas station was only changing it's prices when they ordered new fuel and they only did that every 2-3 weeks, then gas prices would be stagnant during those 2-3 weeks. However, gas prices change day to day (on Friday, it was hour to hour), so that's not really what they're doing.

[epchick]

Originally Posted by AGDee

However, gas prices change day to day (on Friday, it was hour to hour), so that's not really what they're doing.

That might be true where you live, but it isn't necessarily true here. Lately, gas prices have been pretty stable (around $3.52), although you do find different prices in different gas stations.

[Boodleboy322]

Excellent Point AGDee! In my opinion, and it sounds like you agree; I think that there are several layers involved in that net price that we are paying at the gas pump. Weather is good one. If the supply of oil will decrease, it will lead to a decrease in quantity demanded. Could another one be that it's an "Opportune time to make a little more money"?

The other layers of profit margin that are being baked into the net gas price, in other words, what my friends in GC and I are paying is what I'm really curious about. One might argue that an increase to the base price is being used to research new efficiencies, new deposits, etc in the business.

Originally Posted by AGDee

While this seems like it would make sense, it's not what appears to happen in reality because if a gas station was only changing it's prices when they ordered new fuel and they only did that every 2-3 weeks, then gas prices would be stagnant during those 2-3 weeks. However, gas prices change day to day (on Friday, it was hour to hour), so that's not really what they're doing.