Crude closed at $80 a barrel and seems like the pumps are fast to rise and slow to fall. So what’s the relationship between crude oil prices and pump prices?
Let me explain. The lag between US Department of Energy gas prices and crude is around 5 days. (Using a weekly average for both) The pump price at the station you’re pulling into isn’t based on the cost of the product that’s under the stations underground tanks. Instead, its set by how much it will cost to buy the NEXT delivery which factors in distribution costs, refinery margins, crude oil prices, etc. So the next time you’re at the gas station getting mad because prices have climbed up, it’s not the owners fault! In fact, when crude oil prices drop the owner has a better opportunity to make some dough!
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