[BigDog]

Gas price here in Los Angeles is $3.4? dropped from $3.9 a month ago!

Supply and demand? Not at all, How about selling it below cost?! last time when oil price at $100, price of gas was about $4! Airline is paying higher for their gas, but we, consumers are not?! Shows there is no demand problem!

[薺菜]

you mean the demand is week?

[BigDog]

薺菜 寫道:

you mean the demand is week?

I don't see any change in demand. It has been the same for 2,3 years. Price of gasoline always follows oil price but this month all of sudden demand is vanished while price of oil goes to $100? I don't think so!

So what is making the price drop at the consumer lever?

[薺菜]

BigDog 寫道:

薺菜 寫道: you mean the demand is week? I don't see any change in demand. So what is making the price drop at the consumer lever?

got it. thanks!

[小小風]

BigDog 寫道:

薺菜 寫道: you mean the demand is week? I don't see any change in demand. It has been the same for 2,3 years. Price of gasoline always follows oil price but this month all of sudden demand is vanished while price of oil goes to $100? I don't think so! So what is making the price drop at the consumer lever?

Price of gasoline always follows oil price?

Or oil price follows price of gas?

[BigDog]

小小風 寫道:

Price of gasoline always follows oil price? Or oil price follows price of gas?

I am not an expert on oil, so I can only say what happened here in the US.

All gasoline stations on the street corner is not run buy the oil company, they are run by the gas retailers, even on the sign say Chevron, its not own by Chevron the oil company, the retail pay franchise fee for the name. They don't own any oil well nor they produce any oil or refine any oil. They pay the refinery for their gas.

For example, Chevron gas station group will bid in auction which held by refinery for 10,000 gallon 89 gasoline. Then the group will ship the gas to the local street corner gas station and sell it to regular consumers. In this process Chevron the oil company has nothing to do with it. So no matter you buy from Chevron, 76(The union), Texaco they are produced by the same refinery, which has nothing to do with oil company.

Refinery buy from future market month ahead of time from Chicago mercantile exchange and ask for delivery at the current contract expired. And most likely will sell the gas according to current oil price if current price is higher them their contract buying price, because cost to replace merchandise will be higher in the future. So they will sell the gas higher if price of oil goes higher. However, when current price is lower, they some time will not lower the price as fast.

Therefore, gas price will follow oil price goes higher when current oil price is higher, and lower if lower but take longer.

Again, I an not expert on oil can only say this is only true in the US.