Oil prices are down nearly $7 a barrel, but gas is up .07 each day for the last 2 days. I paid $4.11 on Monday…today $4.25
My local Valero guy tells me that he is selling gas at a one to two cents over what he pays. Sometimes he sells it at a loss.
Someone want to explain this to me…Please.
2 Comments
June 7, 2008 at 8:22 am
Alrighty, I’ll jump in here, as someone with a day job in the energy industry:
See, it takes a while for oil to get to a gas station in the form of gasoline. Once crude oil is drilled and purchased in the market for a specific price, it then has to be transported to a buyer for it to be refined (in a refinery) to gasoline, then the gasoline has to be distributed and transported, then there may be a wholesaler who’s buying the gasoline and marketing it to retailers, then there may be more transportation involved getting it to the retail gas station. And then the retail gas station has to respond to supply and demand in their local market to price the gas. And, as your gas guy mentioned, margins are very thin for everyone involved in the process, and those guys in retail really don’t make money from gas, but from stuff sold inside their store. So, at any given time, fluctuations in the price of crude oil may or may not reflect fluctuations in the actual price of gas on the street. This whole process makes it difficult for people to understand gas prices and what actually sets the prices (it is definitely not oil companies).
So, there you have it.
IG
June 7, 2008 at 12:18 pm
thanks IG, I guess my point was that the gas the I paid 4.11 at 6 am hiked to 4.17 at 10:00…same gas…different price. I know this because I saw the tanker truck pull up around 10:30.