I do not understand how a dollar added to the price of a barrel of crude oil can equate to a 60 or 70 cent per gallon raise in price at the pump.Would someone please explain so i will understand?
I’m not sure your figures are correct. Where did you get them?
Do a Google search on “oil prices crude barrel gallon pump”; crude is up to $40 a barrel, having been above $30 for several months, but the price of gas is up maybe $0.75 in the same period (rough estimate, check the facts).
Trying to find comparison prices for crude and gas for a particular period is tough work, but the best numbers I can find say that the national average price for gas, according to the AAA, was $1.503 a year ago, $1.803 a month ago and 1.999 today.
The price of a barrel of crude on the futures market hit a high of $41.85 this week, but is expected to start declining. The reference price for crude was about $33 a month ago and about $25 a year ago. The two pricings are not strictly comparable, but the difference is about right.
So in the past month, the peak of the upturn in prices, crude went up by $8.85 per barrel and gas by 18.6 cents a gallon. Over the past year, it’s 16.85 and 49.6.
There are 42 gallons in a barrel of crude and gasoline is 45% of the final product.
Those are the basic numbers you need to start thinking about the issue. This article gives a lot more information about what happens between the oil well and the pump (although it’s from 2001 so the numbers have changed). Don’t forget that each middleman has to make a profit, and that the gas station is estimated to net no more than a percent or two on the price of the gas it sells.
Looks to me like the prices at the pump reflect the increases correctly. And that your numbers are clearly wrong.