Why are fuelat the pump quick to rise, and slow to drop relative to the price of crude oil?

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Oil prices skyrocketed in May, and fuel prices weren't too slow to respond to the change in market price. Now that oil prices have dropped, why don't we see the savings at the pump as fast as the fill stations were quick to raise prices?




  1. The small consumer has a very inelastic demand for gas, so the price at the pump doesn't HAVE to go down. The price of a barrel of oil gets bartered between indsturial companies and oil corporations, and since hundreds of thousands of barrels are purchased at a time, there is more room for the parties to negotiate.

  2. Competition is what causes prices at the pump to fall. As such, it takes a tad longer than when prices are rising. Since the rising force isn't dictated by competition on the local level but macro supply/demand.

    Station A and B get their gas from the same place for $3.90/gal. Station A charges $4/gal and Station B charges $3.95. Station B is now getting all the business, so Station A is now forced to lower its price to $3.94 to out compete Station A.  And this downward jockeying continues until everybody is at rock bottom and back to trying to earn a nickel from Twik Candy Bars.

  3. Corporate greed.

  4. According to your Govt. it's because the price of oil has not caught up with the price of fuel..figure that one out.

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