Oil Prices Oil Lies

Gasoline prices continue to rise even though the cost of crude oil has dropped. While crude futures were rising, it was consistently linked to the gasoline price increase. So why don't prices drop when the price of oil per barrel drops? Now that's the rub, isn't it?

I don't have an answer to the question, but something certainly stinks.

First, the cost per barrel that is consistently reported is from the futures market. When the cost went over $75 a barrel, that was the futures speculation for May. I believe that the futures' bidding now is for May of 2006. In other words, gasoline prices were rising when the oil had not even been purchased yet.

The futures have dropped to just above $71 a barrel, but the price of gasoline is continuing to rise. If fuels prices are so sensitive to crude pricing, then why are they not sensitive to that pricing going down? My guess is that is one of the areas where the oil companies are making their massive profits. Given the amount of fuel used in the U.S. alone, every day of even a one cent increase adds up to big gains. If you can keep the price edging up even a penny a day, imagine the windfall.

Now maybe the rules of retail sales have changed. However, it used to be that you could not change the pricing on goods already received - even if the next shipment was higher priced. When I was working in bookstores, we ran into this all the time. You would order in some books and a title would be say $15.00 after the standard markup. When the next order came in, they might be $15.50 after markup. It was illegal to go back and markup the old stock to the new price of $15.50. However, that seems to be what is happening with fuel except there is a twist. The price of existing stock is increasing to match the price of oil not yet pumped or purchased. Now there's a business to be in.

Now it is amazing to me that "investigations" of the oil industry seem to find no irregularities. If prices go up when go up and prices go up when futures go down then that certainly seems irregular to me.

If anyone has information on this, I truly hope you will share it.