Editorial: Oil prices decline; gasoline doesn’t
Posted: 07/24/08 - 12:42:32 pm CDT
When oil prices are rising, the way they have been the last few months, criticism of the companies that sell it increases too. It has become common for gasoline prices to rise 5 or even 10 cents a gallon the same day that the oil markets get a whiff of higher prices. When that happens, customers who are paying a lot more for fuel naturally suspect they’re being ripped off.
It’s easy to accuse oil companies of being too greedy, or to blame market speculators for inflating the price of oil. The more accurate truth behind the dramatic rise in oil prices is the fact that Third World countries like China and India are modernizing rapidly. To do that they need energy, and they are buying a lot more oil than they used to.
However, oil companies and refineries aren’t angels when it comes to fluctuations in gasoline prices. Events of the past two weeks prove that.
Gasoline peaked a while back at $147 per barrel. On Wednesday the spot price dropped to about $126 — almost a 15 percent decrease.
But what has that done to the price of gasoline in McComb? Almost nothing.
Gasoline last week cost $3.99 a gallon, and even though the cost of oil has declined dramatically (and appears to be headed further down in the short term — despite the best efforts of all those speculators), gasoline had fallen only a nickel by yesterday, to $3.94. That’s a drop of less than 2 percent — a far cry from the 15 percent decline in oil prices.
Why is this? One reason may be that companies that run oil refineries have seen their profits shrink, because they’ve had to pay more for oil as its price rises without passing those full costs along to distributors.
Still, it’s obvious that when oil prices are moving up, customers feel the effect of these increases right away. It’s just as obvious that customers don’t see an immediate decline in gas prices when oil goes down.
The oil companies need to synchronize these movements. Otherwise they deserve all the criticism they get.
|
Let us know what you think about this story or topic.
|
Your comment may not
immediately appear on this Web site. We appreciate your patience.
|
|
|
|
|
RSS
Take a hike wrote on Jul 24, 2008 1:43 PM:
But if an announcement is made that crude oil prices have fallen, it may take several days for the price of gasoline to decrease.
Hello Mr. Government Investigation! "