Why are gas prices dropping?

Not that I’m not glad they are, but why? About ten days ago it was all over the news how we were headed for record high gas prices, in large measure because of higher than normal fuel oil demand and the threat of war in the Middle East. Now we’re shooting people and gas prices have dropped in my city by about 15 cents a gallon. It’s counter-intuitive; I would think gas prices would have spiked.

IMGO…Wholesale prices are going down because the worries of extreme damage to the Iraqi oil fields are being somewhat abated.

Nah, they’re going dow for the same reason they went up in the first place. Because they can.

The price of a barrel of NYMEX light sweet has dropped ~$10 in the last week, and I’ve heard the drop attributed to both traders no longer worrying about whether or not they’ll be a war, and, as Reeder mentions, a relaxation of worries about damage to Iraqi oil fields.

I think the price of oil will rebound a little, but I don’t expect to see it back at $37 very soon. We still use $25 for our economic evaluations.

That and the fact that OPEC relaxed production quotas.

I’m more interested in knowing why gas prices haven’t dropped more. Oil prices have dropped about 20% but gas prices haven’t dropped nearly that much.

Gas stations are always quick to raise prices when the oil goes up to make sure they make profit. When oil prices fall though, they aren’t going to drop them way fast. They wait and see what the other gas stations do, and only drop the price when the station across the street does.

Wouldn’t gas prices have a natural lag in coming down after oil prices do? I mean after we buy the oil we still have to refine it into gasoline and ship it gas stations.

OK, I’ll buy that, but why do the gas prices go up the instant that oil prices do? It seems like the oil companies are trying to have it both ways.


Gas prices go up when oil prices rise because gasoline retailers know that the next tankerful of gasoline they’ll have to buy to replace the one they’re selling nowwill cost more, and they’ll have to make enough with what they’ve got now to pay for it.

OK, so which end are we getting hosed on? By that argument gas should be going way down now because the barrel of oil they have to buy to replace it has dropped from $40 to $24.


As The Crimson King explained well, we are getting hosed on both ends. The stations will raise prices as soon as they have an excuse to do so, and lower them reluctantly to stay competitive.

keep in mind a lot of the time oil prices mean crap. going from my city (a suburb of dallas, tx) into dallas, the closer to downtown you get, the higher the prices. most of the time there is a 10 cent increase once you get well into the city. the richer(?) suburbs also have more expensive gas…

hell even the station type matters. exxon/mobil and texaco stations are always 5 cents more than phillips 66 across the street, etc etc…

so, to echo Ruby’s statement, it’s because they CAN.

I got a gas store next door. They remodeled in Feb 2003 & got tanks of gas about a month ago & the price was $1.96 it is now $2.23 & they never got another tanker bringing gas. They haven’t dropped the price, it just keeps going up & this is mid-calif.

Funny thing, just a few days ago the owner said in the paper that he was going to close cause he couldn’t make a profit.

Any gas station selling less than a tanker full of gas a month is not selling enough gas to make it worthwhile. Unless you’re watching the station 24 hours a day, chances are they are taking delivery when you’re not around.