What the gas pump’s not telling you

Dan Grech Nov 2, 2007
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What the gas pump’s not telling you

Dan Grech Nov 2, 2007
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Lisa Napoli: Meanwhile, the $100 barrel of oil is looming large, as oil prices hit 96 bucks a barrel this week. Dan Grech looks at why we haven’t seen that cascade to the pumps just yet.


Dan Grech: The main ingredient of gasoline is light, sweet crude. So with oil at record highs, you’d expect gas prices to be way up as well.

But that hasn’t happened. Analysts estimate that regular, unleaded gasoline is a good 15 cents cheaper than the price of crude would suggest.

Oil analyst Jim Burkhard is with Cambridge Energy Research Associates. He says this discrepancy has to do with the amount of money refiners make on each barrel of oil, also known as the refining margin.

Buckhard: The refining margin has declined quite a bit from the spring up until now, so that has mitigated some of the increase in the gasoline price.

Refining margins plunged from $37 a barrel in May to under $3 a barrel last month. The good news for drivers ends there.

Buckhard: If crude oil prices continue to rise, over the next several weeks we’re likely to see higher gasoline prices as well.

I’m Dan Grech for Marketplace.

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