Why Do Gas Prices Jump So High Seemingly Overnight?
NEW YORK (CBSNewYork) – The price of a gallon of regular gas will jump 17 cents on Friday, to about $3.26, on the New Jersey Turnpike and the Garden State Parkway.
It’s hard not to think you’re being gouged at the pump when you see the prices go up that fast, and in some cases, you are. Aside from that, though, the buying and selling of gasoline is a complicated business based on anticipation as much as reality, reports CBS 2’s Don Dahler.
Drivers in the Tri-State are growing increasingly frustrated with growingly expensive gas, and are trying to find ways to avoid the pumped up prices.
“Within a month it went from $3.30 to $4.00,” Long Island City resident Philip Klugman said. “To me, it’s a little ridiculous.”
“I’m filling up now, because I’m sure they’re going to boost their prices up,” Sayreville resident Scott Pimentel told CBS 2’s Hazel Sanchez. “I don’t need to refill, but I’m topping it off.”
The turmoil in the Middle East is a big reason for the spike in oil prices, but the oil that sells for $100 a barrel still has to be refined, so many are wondering why the prices went up overnight.
It’s true that investors will speculate on whether world or natural events will push up the cost of crude oil – eventually leading to higher gas prices – but service station owners also raise and lower their prices based on what it’s going to cost them to replace the fuel that customers are buying today.
“These are businessmen who are buying their supply every day, every other day, and it’s replacement cost,” Beth Heinsohn, of Oil Price Information Service, said. “They have to have enough money, literally, to buy the next tanker load that they sell to customers.”
That oil that made the gasoline that customers are putting into their cars today may have only cost $85 a barrel, but the oil that makes the fuel that will replace it will cost a lot more. Customers, then, are paying more now to cover the station owner’s cost in the future.
“For example, between Monday and yesterday, wholesale prices – the cost at which these guys buy their material – went up across the country 11 to 18 cents,” Heinsohn said.
Station owners didn’t pass that full increase along to customers, because they play the averages, knowing that when the price of oil comes back down, their prices will stay up long enough to make up the difference.
How do you cope with the seemingly unending increases in gas prices? Sound off in the Comments section!