Gas price won't drop as quickly as oil: expert

Gas price won't drop as quickly as oil: expert
Updated Fri. Sep. 5 2008 10:19 AM ET

The Canadian Press

CALGARY -- Motorists expecting the pump price of gasoline to drop as suddenly as the headline cost of crude oil are likely riding for a disappointment, according to one industry expert.

Many consumers misunderstand the relationship between the price of crude and the retail level of gasoline, says Calgary energy industry consultant Michael Ervin.

Crude oil, the main ingredient in gasoline, continued its slide Thursday, dipping below US$108 per barrel. That is a steep drop from its all-time high of US$147.27 per barrel on July 11.

However, the oil price quoted in daily media reports does not refer to its value at that particular moment, but rather a contract for crude that will be delivered the following month.

"Right off the bat it would be pretty misleading to expect today's pump price to be responding to an October crude oil price," Ervin said in an interview Thursday.

"It is linking two events that should not be linked."

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When oil gos up gas is raised the next day

It's funny that the fuel companies used the surging price of crude to justify the huge increases at the pumps, but yet when the price goes down it becomes a different story.