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Ask HN: With oil prices falling how is it that gas prices have stayed up?

5 points by dopamean ↗ HN
I remember hearing something recently about federal laws preventing the export of crude in the US and so we stockpile it here which drives down the price. Apparently, the same rules don't govern refined products and so we can export lots of gasoline which is keeping the price of that up. Is any of that accurate?

Thanks.

6 comments

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sjs382
We're drilling more than we can refine, so costs of the refined product are staying high.

Also, gasoline prices always lag behind crude a bit. Refinement takes time.

GFK_of_xmaspast
Who has any incentive to lower gas prices?
AnimalMuppet
Anybody who has idle refinery capacity. As other commenters have pointed out, though, that's pretty scarce at the moment.
mrpound
There have been ongoing refinery outages all across the country that are causing significant production delays. With people tending to drive more during the summer and taking advantage of relatively cheap gas prices, demand is hovering above average. Companies have been pushing refineries hard this past year taking advantage of the increased demand, which has led to lots of fires and mechanical/equipment failures. This has caused the price of gas around major urban centers like Chicago to shoot back up.

Edit: redundancy.

rockymountain
Refineries are making more money than ever despite the influx of oil supply, lower per barrel cost and slightly above average demand (although demand for oil is expected to be going down worldwide). [1]

California's 4 oil refiners control 78% of the state's gasoline-making capacity. When a refinery goes down for coincidental 'upgrades' or 'repairs', the cost to consumers skyrocket, keeping gas prices high while oil prices maybe rock bottom.

California refineries reaped an average of 49.3 cents on a gallon of gasoline from 1999 to 2014, according to the California Energy Commission. But this year, the average was around 88.8 cents (caused by refinery troubles) creating record breaking profits.

The U.S. hasn’t built a major new refinery since 1977 and many of the refineries do not run at full capacity. Why would they when that would just cut into their profits?

Keep the supply down and keep the prices high and you will have record breaking profits every year. Line the pockets of politicians and you'll be in business for a very long time.

ENRON 2.0

Graph of pump prices across the nation: http://si.wsj.net/public/resources/images/BT-AD814A_REFIN_9U...

[1] http://www.latimes.com/business/la-fi-gas-profits-20150722-s...