Consumer Alert: Gas prices are falling, but more slowly that oil prices. Here’s why.
ROCHESTER, N.Y. (WHEC) – We have a bit of good news for consumers. It’s the price at the pump. Oil prices are falling and gas prices have followed! But gas prices are still near record highs.
Here in Rochester the average price for a gallon of regular unleaded is $4.77. So that begs the question: Have prices fallen as much as expected? The short answer is no.
Oil prices fell below a hundred bucks a barrel last week from record highs of $130 three months ago. It’s now been hovering around $100 a gallon for several days. But the price at the pump is falling far more slowly than we as consumers would like to see. The average price nationally is $4.52. Here in New York, it’s $4.69, eight cents lower than the average price in Rochester. But like me, you’re likely thinking that’s not enough considering how much the price of Brent Crude has fallen.
So I checked the gap between wholesale gas prices and retail prices. That’s the difference in the price that that refiners sell gas for versus what you and I pay at the pump. Since 2016, on average, the retail price of gas has been 87 cents higher than the wholesale price. But right now, the gap is far wider. The retail price is a $1.20 higher than wholesale.
But Patrick De Haan, Gas Buddy’s head of petroleum analysis says it’s not greed widening that gap. He points out that stations lose money when wholesale prices are skyrocketing.
"It’s that lag time,” said De Haan. “Nearly that one to two weeks that prices were climbing, stations were 2 to 4 days behind in raising it to match their price. So when prices go back down, stations which had lost a lot of money for one to two weeks, then slowly lower prices to recoup the losses that they incurred when prices were actively climbing."
And he also points out that oil at $100 a barrel is still historically high. The average price last year was $70 a barrel.
But here’s something else I’m investigating. Are wholesalers and gas stations continuing to pass along the gas tax savings to New York consumers? One study of gas tax holidays in three states showed wholesalers and retailers passed along most of the savings initially, but eventually middlemen and retailers ate up most of the savings, and consumers saved only pennies.
Is that happening here in New York? You know that I’ll keep investigating.