Oil Prices Are Lower, So Why Is Gas Still Pricey? - Oil and Gas * Energy * News * Story

Runway Angels
The superbowl of fashion shows, models walk down the runway at the 2009 Victoria's Secret Show.
Smartphone Guide
Here's a need-to-know guide to nine devices, based on features, price, network and platform.
Wines for the Holidays
Not quite sure what wine to pair with Turkey or Creme Brulee? Our experts do.

FEATURED QUIZZES

How Well Do You Know Your Bird?
Let's talk turkey. Test your turkey knowledge and perhaps pick up a bit of trivia to trot out at your holiday meal.
A Healthier & Wealthier You
Take the following quiz and find out how much you know about the impact of obesity on the health of the U.S. economy.
The Billionaire BFF's
Philanthropists. Bridge partners. Hockey players. Which responses are based on facts from Buffett's and Gates' real lives?

SPECIAL REPORTS

Winterizing Your Portfolio
If 2009 was the winter of our discontent, will 2010 be a winter wonderland for investors? A lot depends on the recovery—or lack thereof.
Investor's Guide to Real Estate
Some even say the long-awaited recovery is here. Regardless, buyers and sellers alike can profit from our guide.
Alternative Investing
Stocks and bonds? Sure. But it's a big world out there for investors.

CNBC ON DIGG

Oil Prices Are Lower, So Why Is Gas Still Pricey?

Topics:Energy | Commodities

Sectors:Oil and Gas

By: Sharon Epperson,, Reporter | 07 Aug 2008 | 03:26 PM ET

Text Size

Oil prices are back up over $120. But that's a sharp decline from July's all-time high over $145. Many drivers watching plummetting oil prices the last few weeks are asking: Why aren't gas prices falling as much?

Here's the answer: It often takes three to four weeks to see the move in oil prices impact prices at the pump. It's true that while we have seen oil prices fall more than $25 since July 11th, we haven't seen the same kind of dramatic move in gas prices ....yet.

The national average for unleaded gasoline hit a high of $4.11 a gallon back on July 17. Today pump prices are down to $3.85 on average--that's a 6% drop compared to a 17% plunge in oil prices.

Oil hit a fresh three-month low yesterday. The last time oil prices were at $118 in early May, retail gasoline prices were around $3.60 a gallon. Some states, including Oklahoma and Missouri, are there already.

While the national average for gas prices may get there eventually, refiners and retail gas station owners have made purchases at much higher prices so they may not be able to bring down their price right away. But in some regions, gas prices could get down to $3.50 fairly soon. (Barring any major geopolitical or weather event, of course.)

Drivers are likely to notice some big variations, though. Even within the same neighborhood, you may see a 20 cent difference in prices depending on what that retailer paid back when wholesale gasoline prices were higher.