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Oil/Gas Price Skew
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]
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