Oil has dropped over $8 a barrel. Will the price of gas go down?

Question

The oil co. have been handed the oil fields in Iraq.

The demand has decreased.

The Saudi's have said that they will increase the supply.

Why then hasn't the price at the pump gone down?

Answer 1

A quarter of the oil used is used by the US. Half of this is used in the transport sector. Yes, demand from the developing world may be increasing, but there is some way to go before it matches the demand from the US.

Oil price is not connected with supply/demand. It is being driven by speculation ie. traders ie. your pension money. There was no spike in demand which led to the rise in prices; in fact, the rise in prices has been accompanied by a fall in demand, as you have noticed.

The drop in oil prices is nothing to do with any of that. It is profit-taking. It is just as likely to go up by $8 tomorrow. Gas prices may fall if the oil price comes down to below $120 per barrel for more than a couple of months. That's how long it takes for price changes to feed through the refinery system to the forecourt.

Whilst the market can bet on future prices only having to pay a fraction of the cost, there will continue to be large scale movements in price.

Answer 2

I hope so.  The high price of oil is s******g up everything.

Answer 3

Demand has NOT decreased.  it may have temporarily decreased on a week-over-week basis, but overall, China, India, and other developing nations are in need of more and more oil.

As for gasoline prices, there is still a lack of refining capacity, so there may be more crude at a reduced price, but the refineries cannot produce gasoline any faster than they were, before.  Hence the price of gasoline remains the same.

Also... a drop of $8 per bbl is about a 6% drop in the price.  So, even if that were to instantaneously translate into a drop in gas prices, the price of a $4 gallon would only drop to $3.84

.

Answer 4

It has so far on my area. (Las Vegas) I bought gas last night at 4.21/gal this morning it is 4.13

Answer 5

It is starting to go down...very..very slowly.  2 weeks ago it was 4.02 here where I live, now it's down to 3.97 since then.  But also remember...the summer months usually bring the highest gas prices, so don't expect them to go down significantly until the summer is over.

Answer 6

It doesn't always work that way.  Let me correct some of your "facts"

First off, no oil company has been handed the oil fields in Iraq.  I don't even know where to go with that one???  Iraq pumps and sells it's oil like any other country, but are not able to extract full production yet because they are still repairing damage and there is a war going on there.

Second, the demand for oil has in fact increased.  You may have heard something about the American demand for gasoline decreased, which is much different fro the worldwide demand for oil.  China is using more and more diesel fuel, which comes from oil.

Third, the Saudis have increased supply.  This has helped to keep the gas, diesel, and other petroleum products from going even higher.

I do not think that we will ever see the price come down to where it was even a year ago.  Right now we need to be thinking about how to use alternative, re-usable fuel that we can make ourselves here in the states and quit buying other peoples oil.

Answer 7

Production methods and greed help keep prices high.

The price per barrel of oil fluctuates based on oil futures which are basically how much oil people THINK we have and what they are willing to pay for it based on that information.  Then it has to get shipped, which costs based on what the last batch was priced at, then refined, then shipped, etc.  A big long chain of cost to keep it high.

That said, the price per barrel may not reflect what you are paying for quite some time down the line.  And what happens if some new source is found in that time?  Price adjustment, etc.  World disaster?  Price adjustment.

And greed.  They like profit.  That is plain and simple capitalism.

Answer 8

where i live its still at $4.27 a gallon. if it does drop it will probably drop to around in the high $3 dollar a gallon mark.

funny thing is i remember when $2 a gallon was a outrage

Answer 9

Because the US needs to learn that right now, we have one of the cheapest gas prices in the world, yet we are still complaining... We need to get more mass transit in the US that isn't completely horrible

And I get thumbed down too? Wow... Over in Germany, its 9.00, and you never see them complaining.

Answer 10

it'll probably go down like a penny or two.

it's almost $4 here now...like $3.90

Answer 11

Oil prices are always slow to drop, quick to rise...

Answer 12

If it goes back to 80$ a barrel, then wait about 4 weeks, it will slowly come down.

Answer 13

thats right, over a two day period oil barrel price dropped over $9 a barrel and the price at the pump did not drop any. You can bet your last dollar if the price had increased over $9 a barrel you would have seen an increase at the pump. Compared to the rest of the world our prices may be low but that does not mean I have to like paying them.