President Trump has claimed oil companies are gouging consumers. He said gas prices aren’t declining as fast as crude oil prices. Gas prices have dropped nearly 60 cents in a month, but remain elevated. Gas prices have been falling for awhile and the national average has dropped to $3.93 per gallon. That’s down from $4.52 a month ago and $4.03 last week. Despite the declines, President Trump claimed “customers are being gouged” by “Big Oil.” He didn’t present evidence, but said companies are not dropping gasoline prices “commensurate with the sharply lower prices they are paying for oil.” More: AI Used To Rig Prices At 1,700 California Gas Stations, Lawsuit Says While the cost of West Texas Intermediate crude has dropped to around $71 per barrel, there was little doubt gas prices would remain elevated for some time following the Iran war. Prices hovered around $100 per barrel for most of March, April and May before retreating this month, following the signing of a memorandum of understanding for the “immediate and permanent termination of military operations on all fronts, including in Lebanon.” Fighting in the latter country has threatened to derail the agreement and it’s worth noting the MoU is only a placeholder for a “final deal” that the United States and Iran aim to achieve within 60 days. Given the uncertainty, the market has still been a little jittery. Regardless, Trump “instructed” the Department of Justice to start looking into his claims of price gouging. He went on to say, “Gasoline prices better start going down a lot faster than what I’m seeing!” However, things are more complicated then they seem and The American Petroleum Institute warned earlier this month that “global energy markets don’t reset instantly when disruptions end.” As they noted, oil tankers are slow and take time to get to their destinations as they only travel at around 10-13 knots (12-15 mph) and they have to cover huge distances. While a ship could travel from the Strait of Hormuz to India in about a week, it could take three to four weeks for a vessel to get to Asian countries like South Korea. For Europe and the Western United States, you’re looking at about a month. More recently, American Petroleum Institute spokesperson Bethany Williams told NBC News, “Gasoline prices don’t move in lockstep with crude oil, especially during a major global disruption that is still affecting supply, refining and inventories.” She added, “Our focus remains on supporting market stability and delivering the energy consumers need.” Lead image: White House
Liked by Justin Poirier, Amelia Hall
Liked by Justin Poirier, Amelia Hall
Liked by Justin Poirier, Amelia Hall
