Oil’s Down, Gasoline Isn’t. What’s Up? | Somewhat Reasonable:
A little more than a year ago, oil prices were above $100 a barrel.
The national average for gasoline was in the $3.50 range.
In late spring, oil was $60ish and the national average for gas was around $2.70.
The price of a barrel of oil has plunged to $40 and below—yet, prices at the pump are just slightly less than they were when oil was almost double what it is today.
Oil and gasoline prices usually travel up or down in sync.
But a few weeks ago the trend lines crossed and oil continued the sharp decline while gasoline has stayed steady—even increasing.
Oil’s down, gasoline isn’t.
Consumers are wondering: “What’s up?”
...
The short explanation is “refineries”—but there’s more to that and some other components, too.
Within the U.S. exists approximately 20 percent of the world’s refining capacity.
...But due, in large part, to an anti-fossil fuel attitude, it is
virtually impossible to get a new refinery permitted in America.
Most refineries today are old—
the newest major one was completed in 1977.
Most are at least 40 years old and some are more than 100.
Despite signs of aging, refining capacity has continued to grow.
Instead of producing at 70 percent capacity, as they were as little as a decade ago, most now run at 90 percent.
They’ve become Rube Goldberg contraptions that have been modified, added on to, and upgraded.
The system is strained.
...While there’s some other contributing factors, the current mix of supply and demand explains: “what’s up?”
The lack of new refineries punishes the whole system.
Gasoline prices are up—hurting consumers.
Crude prices are down—hurting producers.
“A bunch of hoodlums that are throwing their lives away punched my son from behind who is serving his country and has his stuff together,” he said to reporters.
