[TexasNative2000]

A bit of common sense answers the question.....

When gas prices begin to rise sharply, many distributors (not refineries, but distributors) will contract to buy gasoline at a certain price as a hedge against future price spikes. Airlines do this as well.

If your local gasoline distributor has done this, they are more than likely still paying what is now an inflated price for gasoline. They contracted to buy it at a certain price, regardless of whether the market price is higher or lower.

When oil prices fall, they are stuck with having to pay higher costs. They took a calculated risk and it didn't work out. Just as there were market forces that raised the prices to begin with, there are market forces keeping the prices where they are today. Sorry - no conspiracies.

[skeeter]

This would be easier to believe if my local gas station owner wasn’t out there on his ladder changing prices the very moment the price of oil on the global sport market makes the slightest of moves upward.

[saganite]

I don’t think distributers have hedged in my area since the price moved down over the last few months and has been increasing just recently. Your explanation would assume they hedged at a higher price when the market was moving down. Not too likely IMHO.

[Alberta's Child]

Good post. I also seem to remember that after oil prices began sliding in January, oil prices for February delivery remained on the high side for some reason. Gasoline sold today is likely based on this February price, while over the longer term (the next few months) these prices will likely ease.

[mamelukesabre]

Let me get this straight...

If a wholesaler gambles that prices will go up, and he locks in his price today and the price goes up, he gets to sell at the higher price and pocket the profit?

If a wholesaler gambles that the prices will go up, and he locks in his price today and the price goes DOWN, he gets to sell at the higher price anyway?

Either you and I are fools for believing this, or you and I are fools for allowing it to be true.

which kind of fool do you think it is?

[bikerman]

Another factor being crude oil isn't just used to make gasoline,its also used in lubricants,plastics, and many other uses. I also know when gas goes up usually diesel fuel usually drops and when diesel goes up gas goes down.

[MeekOneGOP]

bump! bump! bump!

[Force of Truth]

Good post. I also seem to remember that after oil prices began sliding in January, oil prices for February delivery remained on the high side for some reason. Gasoline sold today is likely based on this February price, while over the longer term (the next few months) these prices will likely ease.

I sure hope you are right.