Oil fell $7.00 today, why is gas still nearly $4/gal?

Gas is under $94 a barrel now. It's the cheapest it's been for awhile now, and has been slowly decreasing for the last few weeks. Soooo, why are gas prices still so high? Ike didn't wipe out our refining capability...





(yes, I know compared to other places our gas is still cheap, thank you very much)Oil fell $7.00 today, why is gas still nearly $4/gal?
Let's look at the numbers.


Bloomberg shows a barrel of crude oil selling at $91.75. Out of that 42 gallons we get about 19.5 gallons of gas. Nowadays almost nothing from that barrel is wasted but it takes a lot of labor transportation and refining(which uses energy itself quite possibly energy derived from the burning of the very oil they refine) to seperate and create the various products.


for the entire barrel $91.75/42(gallons)=2.1845 per gallon. Multiply that by 19.5 gallons of gas and the raw cost of the gas in the barrel is 42.59775. On the North Carolina coast gas is about $3.85 a gallon. That is a profit of 1.6655 per gallon. Now, that profit is BEFORE the crude oil is transported to the United State, before it it refined into gas from the crude oil, Before it has the quite expensive additives like octane and cleaners added to it(among many others), and before it is transported to the local gas companies. Also, out of that 1.6655 per gallon profit the oil company, the transport companies and the gas stations have to make at least a decent profit. Also you have to figure in the Federal and state taxes added to it. In N.C. the combined state and federal taxes equal .38 cents. that comes out of the $1.6655 also.





So you see, the cost of gas in actuality hasn't been artificually inflated like many ignorant people who don't add up the numbers would try and make you believe.





But to answer the question about why gas doesn't always fall when oil prices do is simply because the U.S. is pretty much maxed out on how much gas it can produce. But since the gas companies CAN produce enough they have no desire to spend literally billions building a new refinery that will only be used to produce ';extra'; gas right now(causing the price to drop). Since producing extra gas will build a cushion in the supply and demand numbers building it would actually lower their profits because gas prices would remain the same when something lowers production(like Ike)





you are correct in that Ike did not wipe out our refining capabilities, but it did lower production because the refineries that produce around 20% or so of our gas had to be shut down. It also created the fear that we might lose them. and in any free economy when production is maxed out throwing fear of loss into the mix will always cause prices to increase, it's just the way it works. It works the other way as well. If we suddenly had a billion gallons extra the prices would drop like a stone. But that ain't happening till America quits wasting so much of it.





Hope I answered your question and showed you that the oil companies aren't some big evil beast like many believe.Oil fell $7.00 today, why is gas still nearly $4/gal?
1 of the reasons is because going by the %'s when crude reached it's max gas SHOULD have been nearly $7/gal. If it had gas companies would have not got in trouble cause the %'s would have been the same. clap they weren't greedy.so now it might not drop as fast as barrel price to make up for it. Report Abuse

Because the greedy bastards raise the price as quickly as they can and lower it as slowly as they can, over and over and over.





At least that is how it appears to me, after years and years of watching these buggers play that game. They claim otherwise, but that is not how it appears to me.
Probably because gas and oil are two separate types of fuels.
give it a minute.