Gas prices are higher then ever, setting a record in California this week. So far, the high price is said to be tied to the high price of crude oil which has recently been hovering around $100 a barrel.
According to the AAA, crude oil cost more than 60% more than it did this time last year, but gas prices are not up 60% over last year. Gas only costs about 20% more than it did last year at this time. What gives?
With the price of gas edging toward $4 a gallon in Mammoth Lakes and already there in Death Valley, we talked to Sean Comey with AAA about the high price of crude oil and how it relates to gas at the pump. Comey explained that the general rule is that for every $10 rise in the price of crude oil, gas at the pump goes up 25 cents. If that general rule held true this time around gas would be about $4.50 a gallon, based on the price of oil a year ago.
Comey explained that one reason gas isnt even more expensive right now is that profit margins at the refinery, which were incredibly high, last year are not so high this year. This year, he explained, there is a glut of refined gas on the market which has limited the impact of the high crude oil price.
Usually the price of gas peaks around Memorial Day each year, when demand is highest. This, and the fact that Comey says it can take 2-6 weeks for the price of crude oil to be reflected at the pump could mean that the highest prices are yet to come.