A Mobil station in Mobile, Alabama has gasoline for $4.79 a gallon on March 14, 2022. Matt Stone is a reporter for the Media News Group and the Boston Herald.
I've gotten a lot of questions about when we might see some relief at the gas pump. There have been more complaints recently because gasoline prices didn't follow the fall in oil prices. Many have concluded that they are being ripped off at the pump.
There are a lot of myths involved in this reasoning. Many say it's because of Big Oil. Most of the retail gas stations in the US are not owned by oil companies. It doesn't mean the station is owned by the oil company.
ExxonMobil has its name on a lot of gas stations, but it doesn't own any gas stations in the U.S. You are looking at the wrong person.
Let's look at the data. The average weekly price of West Texas Intermediate increased by 70% between the first week of December and last week.
The national average weekly retail price of gasoline increased by 28% over that time period. You can see it for yourself. Retail gasoline is playing catch up to oil prices.
In that time, the average spot price of gasoline increased by 61%. The data shows that retail stations haven't absorbed the oil price increases since December. Retailers and refiners may be making less money now than they were because of their inability to fully pass on price increases.
Oil producers are making more money. Many people don't differentiate between oil producers, refiners, and retailers. The supply chain has different parts. When prices spike, it's harder for retailers to pass on the full price increases.
When oil prices fall, refining and retailers make more money. You are correct if you think gas prices will go up quickly. Several studies have attributed consumer behavior to the phenomenon of rockets and feathers, which is when prices are falling.
Every time prices go up, the issue of price gouging comes up. The investigations conclude that the price spikes are caused by supply and demand.
The bottom line is that gasoline prices haven't fallen because last week's oil prices were different. The retail gasoline prices were still absorbing the increases in the oil price. If oil prices had not fallen, we would have seen another price increase in gasoline over the next few weeks. Spot oil prices do not affect retail gasoline prices. You shouldn't expect prices to go down just because oil prices go down.
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