For U.S. consumers, there's good news and bad news on the gasoline price front.
First the good news: U.S. retail gasoline prices have fallen every day for about a month, CNNMoney.com reported Monday,
citing motorist group AAA data.
Now the bad news: Prices are not falling nearly as fast - - or as proportionately - - as they rose, given the same dollar-move in a barrel of oil.
The AAA said the national, average price for a gallon of regular unleaded has fallen 30 cents to $3.81 from a record high of $4.11 set on July 16, 2008, CNNMoney.com reported Monday.Gasoline prices: Quick to rise, slow to fall
However, during that time period oil has fallen about $25
to roughly $115 per barrel. Given the roughly 2-cent to 2.5-cent move for every $1 move in the price of oil, gasoline prices should have fallen 50-62 cents per gallon. Why haven't they?
Economist Peter Dawson told BloggingStocks Monday the answer is complex and contains many variables, but the strongest factors today appear to be gasoline station cash flow, and profit maximization.
As soon the price of oil increases, some gasoline stations will increase the price of gasoline, in anticipation of a price increase the oil company will institute for the next gasoline delivery, he said. "Failure to do so would create a monthly cash flow deficit for the gas station," Dawson said. "It's sort of like an additional monthly expense."