Posted: Aug 12, 2011 6:24 PM by Dr. Anya Winslow
Believe it or not, price per barrel of crude oil is about the same as it was in 2009 -- anywhere from $83 to $85 dollars says University of Colorado at Colorado Springs economist Fred Crowley -- but the price at the pump is $0.30 = $0.40 cents higher.
Why the difference?
Crowley says, "One of the problems we have right now is supply of gasoline is rather low. In fact, we're about ten to fifteen percent below inventory compared to where we were earlier this summer." That is one part to why the price is higher at the pump.
If the price per barrel drops, the price at the pump lingers at the higher price because retail gas shops need to recover some of their costs.
"The gas station will try to maintain higher prices for gasoline because that gas station still has fuel tanks filled with the more expensive gas The gas station's just trying to recover its cost of the gasoline in the ground. It's not really trying to make a profit. It's trying to keep from losing money," says Crowley.
And if you are thinking that the gas retailers are simply greedy Crowley adds, "Retail gas shops actually only make $0.03 - $0.05 per dollar. So, in a price of a gallon of gas, they only make $0.10, $0.11 or $0.12 per gallon. They don't make a whole lot of money."
Crowley also mentioned summer months are peak travel, vacation and tourism times. Gas prices typically experience a fifteen percent spike during the summer; however, right after Labor Day, historically, prices have been shown to go down.
In fact, Crowley says, "I would anticipate the price, locally, of about $3 a gallon at the end of September."
He adds that the prices will most likely tail off in the winter months, but not that much as compared to September, "you might see high two-dollar-nintey range per gallon of gasoline. Even three dollars is possible."