With Alaska’s governor still proclaiming her dubious energy expertise, I was disappointed that she was not asked to explain the following simple, if “crude” question: With crude oil prices now between a 35 and 40% less than they were back in the summer, why are gasoline prices barely off 10% from their summer peaks?
To be more specific, crude oil futures have fallen from close to $150 a barrel to between $90 and 94 per barrel, while US gasoline prices have dropped on average from just over $4 per gallon to around $3.63. Curiously, spot gasoline is now below $3.00 in Kansas and Oklahoma, while remaining at around $4.00 in Georgia. (the latter ostensibly related to refinery issues)
Naturally, the very Wall Street brokerage firms (Merrill Lynch especially) that had been hyping energy futures to the moon are now either bankrupt or transmogrified into “banks.” The massive speculative money that drove crude prices through the roof is now largely gone, as are the all-too-related, if breathless, warnings that the Israelis were about to emulate Senator McCain and “bomb, bomb, bomb Iran.” Speaking of which, where’s that ING analyst who early last year proclaimed that energy prices were not as tied to the health of western economies as they once were, and that any shock felt by an actual war with Iran would be insignificant?
Most of the remaining oil “analysts” on CNBC are yet again hawking their current trading position — to the downside, of crude oil prices falling further, even below $80 a barrel. As Helena noted previously, AIPAC even lost a rare one in congress last week; — no uniltaral economic blockades for the moment of Iran — adding to the “bearish” overhang on energy prices.
This could be good news for consumers, and (gas-p) for the economy. But gasoline prices remain stubbornly high. And the media doesn’t notice. It’s a political softball waiting for someone to hit.
6 thoughts on “A “crude” question about gas prices”
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Occurred to me to check my assumptions by looking at US DOE/EIA #’s for year-over-year changes in oil & gasoline prices.
On average, gasoline prices are today 85 cents a gallon higher than they were last year (31%), while crude oil prices are $14 a barrel higher than a year ago (17%).
Go figure. :-}
and something for our local Charlottesville readers to ponder — as of today, gas prices in Albemarle County are the highest in the State, even higher than suburban Washington. (and sharply higher than just one county west) See gasbuddy.com numbers.
And where again, is our local media on this one?
With no media focused on consumer issues, it seems the gas retailers can get away with it, for now.
It is strange, especially as the wholesale gasoline crack spread is even lower than it was a year ago (as of today it’s gone negative… meaning that gasoline is now a waste product for refiners)
still, consider yourself lucky. canadians pay a lot more, europeans more than twice as much.
Believe it or not oil has to be refined before it becomes gas! In other words there are more factors at play in the price of gas than just the price of crude (though it is the largest component at approx. 58%). Refinery capacity took a hit because of hurricanes Gustav, Helena, and Ike; and gasoline inventories are low. There are some parts of the U.S. (southeast) where it is difficult to get gas at all, price be damned.
For some info see The Oil Drum article at:http://www.theoildrum.com/node/4585#more
Gasoline prices rose much less than crude oil on the way up; so not surprising that they are lagging crude on the way down.
Th stock prices of US refiners have plunged over the past year, because they are only marginaly profitable now despite gasoline lagging crude on the way down.
Gasoline prices rose much less than crude oil on the way up; so not surprising that they are lagging crude on the way down.
Th stock prices of US refiners have plunged over the past year, because they are only marginaly profitable now despite gasoline lagging crude on the way down.