gas should be 95c a gallon right now

    I was looking at the price of crude oil recently, and did some quick
calculations.  Based on the current prices refiners are paying, and
comparing it to what we were paying for gasoline a couple of months back
($1.39 around here), we should now be paying about 95 cents a gallon for
gas.

   Instead, as the price for crude oil has fallen, and as a surplus of
crude oil builds, the price has actually GONE UP by about 50 cents.

   Now correct me if I'm wrong, but I always thought that as the supply
increased, and the demand decreased, that the price also decreased.
That was what they taught us in macro and micro economics, anyway.

   So why is the price slowly going up right now?

 

Could have something to do with refinery maintenance.  The cost of gas
is not just the cost of oil.  Demand for gas is down, but equipment
still must be maintained and there are fixed costs that must be
covered.

 Wholesale unleaded gas is $1.25.
In my city tax and distribution add around $0.70.
The pump price is a little below that now.

 

The question is why is the wholesale price of gasoline so high when the
input (crude oil) is so low?

Gas prices locally dropped to around $1.49 maybe eight weeks ago.  Today's
price is $1.89, but the price of crude is about the same as 8 weeks ago.  
Somebody is making more money at the expense of consumers.

 

Unlike a lot of folks, I understand that oil companies actually make
relatively low profit margins.  The profits in real dollars look high
because the revenue is also high.

My employer just three or four years made over a 25% profit margin and had
been even higher in years before that.