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Well, counter-intuitivley, consumer gas prices aren't falling nearly as much if at all. Personally I think the DOJ should investigate refineries, as none of th

Well, counter-intuitivley, consumer gas prices aren't falling nearly as much if at all. Personally I think the DOJ should investigate refineries, as none of the seem particularly eager to compete on price. They're making record profits as the price of crude collapses while the price of gasoline is flat. http://www.latimes.com/business/la-fi-refinery-profits-record-20150731-story.html http://www.latimes.com/business/la-fi-refinery-profits-recor... It seems very fishy to me that we have so much crude building up, yet consumers aren't seeing any real benefit from cheaper gas, cheaper shipping, or cheaper domestic flights.

washedup 11y ago
There is a refinery problem in Indiana which is why gasoline is staying elevated even thought crude is falling. If anything happens along a refinement chain, there is a disconnect between market prices. The full affect is on the Chicago area, not sure how it is affecting other regional markets.
- gech 11y ago
  Prices haven't dropped elsewhere like they should, you know that.
ams6110 11y ago
Refining capacity doesn't increase because of a drop in crude oil prices. If supply of gasoline cannot be increased, prices will not fall even if the raw crude price falls. The EPA has been hostile to refinery expansion or new refinery construction.
- sliverstorm 11y ago
  Capacity doesn't increase, but costs do decrease as the cost of raw materials drops. Now, obviously price is only partly determined by cost.
  - pm90 11y ago
    That's kinda the whole point. There is nothing for refineries to gain by reducing the price of gas because...nobody is going to sell gas at a lower price and take over the market because...the EPA does not allow one to build refineries. Free markets y'all.
    - OniBait 11y ago
      So much this. Price is driven by supply and demand. Not the cost of materials.
      - brianwawok 11y ago
        But price changes supply, no? Some oil is $1 a barrel to pump. It will always be worth pumping. Some oil is $50 a barrel to pump. It is only worth it when oil price is greater than $50 a barrel.
    - guelo 11y ago
      Free markets don't account for negative externalities so they have to be regulated y'all. In any case, gasoline prices do move so there must be some market forces at work, but it's a mystery at least to me. I'd love to read an explanation.
    - mtviewdave 11y ago
      >the EPA does not allow one to build refineries Two refineries have opened in the US this year: http://www.eia.gov/tools/faqs/faq.cfm?id=29&t=6 http://www.eia.gov/tools/faqs/faq.cfm?id=29&t=6
  - mhuffman 11y ago
    This is more of a lack of competition issue. A lot of gas suppliers have regional contractors that basically have a lock on entire regions and their prices. There is no incentive to reduce price. Also, since we can not export crude, but can export distillates, we can sell gas to other countries, increasing demand to some extent.
angersock 11y ago
Consumer gas is an inelastic demand--they've got people by the neck. People had forty years to figure out, "Shit, what happens if gas gets expensive", and they did the wrong thing. Let'em pay.
- maxerickson 11y ago
  It's an interesting question. How many people have made choices that at least somewhat accounted for uncertainty in oil prices? You can't see the retirees who stayed in their suburban home instead of moving to rural Wyoming (I don't mean that there are tens of millions matching that description, I mean there are things that are really hard to measure).
saryant 11y ago
Airfare isn't falling because the domestic airlines a) have a triopoly and b) have learned not to compete on marketshare, so capacity isn't increasing as much. The big 3 have become much more disciplined when it comes to revenue management.
- jonknee 11y ago
  Actually airfare prices have fallen recently. http://www.nbcnews.com/business/travel/airline-fares-record-steepest-drop-20-years-declining-fuel-costs-n412461 http://www.nbcnews.com/business/travel/airline-fares-record-... > Airline fares recorded their steepest monthly decline in 20 years, falling 5.6 percent last month, according to the Bureau of Labor Statistics.
ars 11y ago
> consumer gas prices aren't falling nearly as much if at all. Consumer gas is a very small portion of energy use. Just a very visible one.
dade_ 11y ago
Many refineries were closed by oil companies with the intention to reduce supply and raise prices. Now there is a glut of crude, and they don't have the capacity to take advantage of the low crude cost / high refined product cost. https://books.google.ca/books?id=74brGsoymBoC&pg=PA35&lpg=PA35&dq=oil+close+refinery+increase+margin&source=bl&ots=6Njn9YZwHR&sig=evbLrmK0lx3fitgo_Q8zMA8133s&hl=en&sa=X&ved=0CBwQ6AEwADgKahUKEwiS4KrFr7vHAhURf5IKHT2YDYU#v=onepage&q=oil%20close%20refinery%20increase%20margin&f=false https://books.google.ca/books?id=74brGsoymBoC&pg=PA35&lpg=PA... Recently they have also been deferring maintenance to keep capacity of their refineries as high as possible and now failures are causing major shutdowns.

washedup 11y ago

There is a refinery problem in Indiana which is why gasoline is staying elevated even thought crude is falling. If anything happens along a refinement chain, there is a disconnect between market prices. The full affect is on the Chicago area, not sure how it is affecting other regional markets.

gech 11y ago
Prices haven't dropped elsewhere like they should, you know that.

ams6110 11y ago

Refining capacity doesn't increase because of a drop in crude oil prices. If supply of gasoline cannot be increased, prices will not fall even if the raw crude price falls. The EPA has been hostile to refinery expansion or new refinery construction.

sliverstorm 11y ago
Capacity doesn't increase, but costs do decrease as the cost of raw materials drops. Now, obviously price is only partly determined by cost.
- pm90 11y ago
  That's kinda the whole point. There is nothing for refineries to gain by reducing the price of gas because...nobody is going to sell gas at a lower price and take over the market because...the EPA does not allow one to build refineries. Free markets y'all.
  - OniBait 11y ago
    So much this. Price is driven by supply and demand. Not the cost of materials.
    - brianwawok 11y ago
      But price changes supply, no? Some oil is $1 a barrel to pump. It will always be worth pumping. Some oil is $50 a barrel to pump. It is only worth it when oil price is greater than $50 a barrel.
  - guelo 11y ago
    Free markets don't account for negative externalities so they have to be regulated y'all. In any case, gasoline prices do move so there must be some market forces at work, but it's a mystery at least to me. I'd love to read an explanation.
  - mtviewdave 11y ago
    >the EPA does not allow one to build refineries Two refineries have opened in the US this year: http://www.eia.gov/tools/faqs/faq.cfm?id=29&t=6 http://www.eia.gov/tools/faqs/faq.cfm?id=29&t=6
- mhuffman 11y ago
  This is more of a lack of competition issue. A lot of gas suppliers have regional contractors that basically have a lock on entire regions and their prices. There is no incentive to reduce price. Also, since we can not export crude, but can export distillates, we can sell gas to other countries, increasing demand to some extent.

angersock 11y ago

Consumer gas is an inelastic demand--they've got people by the neck. People had forty years to figure out, "Shit, what happens if gas gets expensive", and they did the wrong thing. Let'em pay.

maxerickson 11y ago
It's an interesting question. How many people have made choices that at least somewhat accounted for uncertainty in oil prices? You can't see the retirees who stayed in their suburban home instead of moving to rural Wyoming (I don't mean that there are tens of millions matching that description, I mean there are things that are really hard to measure).

saryant 11y ago

Airfare isn't falling because the domestic airlines a) have a triopoly and b) have learned not to compete on marketshare, so capacity isn't increasing as much. The big 3 have become much more disciplined when it comes to revenue management.

jonknee 11y ago
Actually airfare prices have fallen recently. http://www.nbcnews.com/business/travel/airline-fares-record-steepest-drop-20-years-declining-fuel-costs-n412461 http://www.nbcnews.com/business/travel/airline-fares-record-... > Airline fares recorded their steepest monthly decline in 20 years, falling 5.6 percent last month, according to the Bureau of Labor Statistics.

ars 11y ago

> consumer gas prices aren't falling nearly as much if at all. Consumer gas is a very small portion of energy use. Just a very visible one.

dade_ 11y ago

Many refineries were closed by oil companies with the intention to reduce supply and raise prices. Now there is a glut of crude, and they don't have the capacity to take advantage of the low crude cost / high refined product cost. https://books.google.ca/books?id=74brGsoymBoC&pg=PA35&lpg=PA35&dq=oil+close+refinery+increase+margin&source=bl&ots=6Njn9YZwHR&sig=evbLrmK0lx3fitgo_Q8zMA8133s&hl=en&sa=X&ved=0CBwQ6AEwADgKahUKEwiS4KrFr7vHAhURf5IKHT2YDYU#v=onepage&q=oil%20close%20refinery%20increase%20margin&f=false https://books.google.ca/books?id=74brGsoymBoC&pg=PA35&lpg=PA... Recently they have also been deferring maintenance to keep capacity of their refineries as high as possible and now failures are causing major shutdowns.