PITTSBURGH (KDKA) – Oil prices fell below $100 a barrel on Tuesday after touching $139 a barrel at the start of Russia’s invasion of Ukraine.
That’s good news for consumers, but as Jon Delano, KDKA pre-editor explains, that drop may not be reflected in gas pumps, at least not immediately.
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When the price of oil rose two weeks ago, the price of gasoline has also risen to record levels. Ten to twenty cents overnight for some days is common. Now that the price of oil has dropped by almost 30%, you would expect a similarly rapid drop in prices at the pump. But don’t count on it.
“We’ve seen prices level off and actually over the last few days in Pennsylvania, they’ve dropped a few cents here and there,” Jim Garrity told AAA East Central.
Not much drop, as the state average for gasoline is still $4.41 a gallon.
Tim Redshaw is president of Countywide Petroleum, which supplies gasoline to several service stations in our area.
“It will swing up and down. I think this is a strange moment in my history when prices have moved so quickly in such a short period of time,” said Redshaw.
SEE: KDKA’s Jon Delano Report
Redshaw says that today’s world price of a barrel of oil is somewhat unrelated to the price of a gallon of refined gasoline today. He says it will take time to see the pump’s price drop.
“They are a bit unrelated and it will take some time, maybe a week to ten days before you see anything at the pump is my guess,” he said.
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Meanwhile, someone is making money, but Redshaw says it’s not the stuff at the end of the supply chain,
When refiners raise gasoline prices for distributors like him, he says he will pass the price increase to service station dealers while keeping his own price margin flat.
Delano: “When the price goes up, aren’t you making money? Is it the service station agent or someone else? ”
Redshaw: “When prices go up, I push that price even more onto the price controllers and the big oil companies.”
Analysts say oil prices have fallen as OPEC appears poised to produce more oil and China, impacted by COVID, is likely not to need as much energy in the short term. If nothing else, that is reducing the likelihood of gasoline prices even higher.
“I think it’s probably stabilized a little bit, so I expect the number to be as high as it’s going to be,” Redshaw said.
If oil sustains around $100 a barrel – instead of hitting $150 or even $200 as some predicted – that will stop the upside from pumping and possibly send us back down to the lows. under $4 a gallon.
However, Garrity said, “Crude oil has dropped over the past few days, which could mean a drop in pump prices, but there are many factors at play. We already know that this is an extremely volatile situation. “
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For a breakdown of gas prices by state, click here. To find cheap gas in Pennsylvania, click this.
https://pittsburgh.cbslocal.com/2022/03/15/price-of-oil-drops-gas-prices-lag-behind/ Oil prices fall but pump prices may fall behind – CBS Pittsburgh