If the price of oil has dropped, why are gas prices sky rocketing?

The answer lies in the question. Oil prices may have dropped (not sure if they did or not, they were up to about $63/barrel at the end of March rising about 10 dollars since January) but Gasoline is only one by-product of oil. Hence they are both separate industries, of course purchasing oil is an expense for the refining process, but supply and demand still hold out in this market economy.





Demand remains high for gasoline, regardless of crude oil prices, the other costs associated with oil refining have not changed, therefore there was no shift in the production possibilities curve (PPC). In our market economy, essentially this causes no change in the supply curve.





On top of that, being that it is nearing summertime, more people are traveling, therefore, increased demand (a rightward shift) overpowers the unchanged supply curve, and increases the price of gas in the process (changing market equilibrium to a higher price point).If the price of oil has dropped, why are gas prices sky rocketing?
Because there is little competition in the gasoline business. Five majors control almost all the gasoline consumption in the US. It costs about a billion dollars to build a new refinery and none have been built for about twenty years.


The reason for the above high cost of a new refinery is environmental specs are very rigid.


Think about it, if you owned a refinery and was making billions of dollars a year, would you build a new refinery and drive down gas prices and your profits?


We desperately need to encourage the US government to help develop alternate fuels such as coal to liquids. South Africa did it many years ago when they world refused to sell them crude oil. The technology exists so lets get on with it.If the price of oil has dropped, why are gas prices sky rocketing?
Because it can....Until we say that we've had enough of these lies and we're not going to buy fossil fuel burning automobiles


anymore...it will continue to what the Republican want. I'm 45 years old and I remember that we had an embargo on foreign oil back in the 70's. We were on vacation in Texas...yep Texas and my dad was not able to fill up the tank, he was only allowed 5 gallons at a time. There were no 24 hour mega gas station at every corner back then. Our presidents family fortune comes from oil and yes Saudi Arabia is their best interest right now.There was a e-mail posted where I work, DONT BUY ANY GASOLINE ON MAY 15th, pass it around.. We should also boycott foreign owned oil companies like Citco. We did what they told us to do,economize, buy fuel efficient cars, make less trips and what did that get us....Higher priced everything!!!!


When I was 17 back in 1977 gas was 97 cents a gallon, not one new refinery has been built since the last one opened in 1958. Wow if that don't make you think the government is in on it........I'd buy an electric car oh wait we tried that when the Tucker was in the news. The love of money is still the root of all evil....
I would said its greed!! They claim new refinery is needed but not willing to paid for it (for now). If and when they do the cost of building it will pass onto you and I. The environment is another issues they claim, if that is so, why don't they just up grade the refinery. some feel the price of gas will be at $4 a gallon. Not matter what they said, I still believe its greed!





P.S. The Europeans Germany %26amp; British are paying a heck alot more for a gallon of gas compare what we are paying in the states.
Believe it or not, oil prices could drop to about $10/gallon and gas prices would still be high. It's a matter of refining capacity... Theoretically, the oil could be free and gas could still be very expensive if refining capacity was low.





Also, ';boutique'; blends drive the price waaaay up. Washington DC may require one specific blend of gasoline, while neighboring Virginia cities and Maryland require their own blends. (There are hundreds of blends required throughout the country to target certain emissions.)





The key to all of this is government regulations. Building a refinery nowadays is almost impossible because no one wants them in their own back yards, and environmental controls are such that companies can almost not comply with them. Until we loosen environmental regs, look for gasoline prices to remain high.





The other option is to lower consumption, which lowers demand. When demand goes down, price goes down. But Americans don't seem to be interested in getting rid of our big gas guzzling cars
The economics of oil market is quite complicated, as well as relationship between the price of crude oil and gas.


BUT I'm sure you'll get a lot of answers from the ';experts'; here blaming the government and the President personally. You'll see.
bc its summer time and peple are travleing i think...but thats just my opinion. plus, they know people will pay for it. by the end of the summer gas is saposed to be around 4 bucks a gallon i heard