Crude has dropped $22/barrel recently. Why has the price of gas only dropped about $.10 a gallon?

Question

Crude has dropped $22/barrel recently. Why has the price of gas only dropped about $.10 a gallon?

Answer 1

I just heard an economist describe this on NPR yesterday.

It is described as the rocket and the feather.  When crude prices rise. the retail price shoots up like a rocket. When they lower, the retail price falls like a feather.

One aspect of this is when prices rise, companies must generate capital quickly and therefore rise the retail price quickly to cover expense. As prices fall, the crude still in the production "pipeline" (no pun intended) is still that high price crude, therefore the prices falls more slowly.

The other is simple economic greed. Wholesale prices rising gives the retail distributors the excuse to quickly raise prices. When wholesale prices fall there is generally a window where they can maintian the higher price before negative consumer reaction has an impact.

Answer 2

cause for every dollar for a barrel only equals 1/2 a cent for the gas plus they like s******g people over  

Answer 3

I know...I  have had the same questions lately. Our gas is 4.19 not that much of a drop from when it was at it's highest, I expected a bigger drop at the pumps.

Answer 4

Prices always fall slower than they rise.  Most businesses in an industry like that actually lose money on the distribution side when prices go up.  So when they drop they try and make as much profit as possible before competition kicks in to drop them.