Why Prices at the Pump Sometimes Hold Steady Even When Crude Petroleum Plunges

Americans tend to be optimistic people, and that is probably part of the reason for why the country’s economy is generally so resilient and prone to growth. While entrepreneurship rates might have dropped a bit lower than many economists would like, Americans continue to found and cultivate new businesses at a relatively rapid pace. The buying habits of consumers also regularly reflect a deep, persistent optimism, even if they also adjust to tough economic times. Drivers who faced gasoline prices of four dollars or more per gallon only a few years back, for instance, have resumed buying relatively large, fuel hungry sport utility vehicles en masse.

While many Americans might therefore have gotten over the negative feelings that came with such high prices at the pump, many still remember wondering why those numbers seemed out of touch with the costs of petroleum on world markets. In several distinct cases during the last period of especially high gasoline pricing, significant drops in the costs of commodity petroleum seemed to have little effect. Given that the price of petroleum is widely acknowledged to be the single most significant contributor to gasoline pricing, even the most optimistic and positive of drivers might be forgiven for wondering what was going on.

Those who check over here will discover that there are some fairly simple, straightforward answers to questions like these. The most important thing to understand, in many cases, is simply that there is always something of a disconnect between current petroleum prices on world markets and what refiners will have paid for the raw materials that went into making the gasoline currently flowing from the pump at a local station. With some refineries doing billions of dollars in business every year, most have to make sure to have ample supplies of the necessary inputs at all times.

A quick, temporary drop in the price of petroleum might therefore matter relatively little to a particular refinery or distributor. In some cases, even relatively long lasting price reversals will not influence the level at which a refinery offers its output for sale. While the gap between petroleum price movements and those seen by drivers filling up at the pump might be taken as a reason for cynicism by some, there are therefore frequently some more positive and reasonable explanations to be found.