While the price of gas falls the cost of oil rises
At the beginning of this week oil prices have been near their record but the price of gas has continued to fall for the second week in a row now. This is very uncharacteristic of these 2 to move in opposite directions like this and yet the price of gas will more than likely continue to decline even further. Therefore, you really shouldn’t be thinking that the high price of oil will have much of anything to do with what is going to happen at you local gas station. In fact, the cost of gas is down at least 8 cents, making the price of a gallon of regular gasoline $2.88 in 36 states. These prices were actually the lowest in Ohio and the highest in Hawaii. Throughout all of this though the price for oil, which accounts for half the retail gas price, have remained elevated.
So, what is leading to this higher price of oil? First of all there are some refineries that are coming back online after they have been down for maintenance earlier this year. Secondly recent data has shown a rebound in the economy, which could point to strong demand for energy from businesses and consumers, a well as for continued concerns about hurricane disruptions.
The refinaries are actually the main issue. This is because earlier in the year they were shutting down for maintenance, which led to increased concern that there would not be enough gasoline this summer. As such the prices increased rapidly. However, now that these refineries are starting to operate at full capacity again, there is anticipation of healthier supplies, which will in turn lead to lower gasoline prices at the pump.