Crude Oil vs. Price at the Pump - Somebody is getting wealthier...

Remember when everyone started adding surcharges and the price at the gas pump went nuts? Airlines had to add fees for baggage, stop serving pretzels (because pretzels are apparently really heavy), and the ticket price went up by about 250% on some routes, etc. Now the price of crude oil has dropped at a record pace, currently at about $60/barrel. Meanwhile the price at the pump had dropped about 45 cents on average. Ok, so 45 cents seems nice, but remember as the climb occurred we added over $2.00 to the price. So if the price per barrel has now dropped to pre-climb levels, why are we not paying $1.75 at the pump?

For the visual learners, here is a chart I worked up using the options at the gasbuddy website.

You can work up your own graph at Gas Buddy



Instead of running at a roughly parallel disparity, the price of crude has dropped sharply, while the price at the pump has dropped moderately. Let me roll back the chart a bit further and you will see what gas should be running at the pump.



See right there at about 10 March 2005, crude prices are right about where they are now ($59.63 as of today). At that time, pump prices were about $1.75. Why am I now paying $2.63? That seems about $1.12 too high to me. Why do I still need to pay more for my airline ticket (fuel surcharges) and $15/per bag on my recent trip to JFK? It seems like someone is pocketing some extra greenbacks here, and it is not me.