I work on the fringes of the petroleum industry. I have neither control nor influence... But I do have a window seat- daily- on the inner workings of it all.
And it's starting to make me sick.
More below the crack...
The price you pay at the pump is determined by several factors: taxes, the station's overhead, the price they actually paid for the gas you buy chief among them.
Well, the tax rate is predetermined, and the station owner knows exactly what they have to make in order to stay in business...
The wild card- for a long time now- has been what the retailer pays their supplier for the gas. The more the refinery charges, the more the retailer has to pay- and this increase is defrayed by raising the prices that you pay to fill up your shiny new SUV.
Simple enough. And it seems like a pretty normal supply and demand situation, at this level.
Couple of other things to consider. First, lag time:
The gas you bought today was probably delivered some time ago. The station owner paid for it at a lower- possibly substantially lower-rate than is being charged right now.
This allows for a certain flexibility in their pricing beyond normal supply and demand. The station owners know that the price they pay for the gas is going up... But the stuff they have in the tanks cost them less.. They can afford to keep their pump prices a bit lower than it would be if they were pricing their gas based on what they would have to pay for the stuff now. Or they can raise their prices to try and make a little money in advance of the increase in price they are gonna have to pay for their next tankerful.
Next... Unbranded versus Branded. Branded stations have an agreement to purchase their gas from one particular supplier. These places usually have that refiner's name prominently displayed and are "in livery" as if owned by that particular refiner (although some are not- it gets really complicated). Unbranded stations are- these days- usually chain convenience stores. They purchase their gasoline from whoever has the best price, regardless. They have no particular contract, and their gasoline carries no refiner's name.
There are benefits to having either a Branded or Unbranded operation. In general, Branded stations have an assured supply and financial structure to rely on... Whereas Unbranded stations have the ability to seek out the lowest possible prices for delivered fuel- often allowing them to offer a lower price at the pump.
Here's why all of the above is important:
The refiners have started cutting off their unbranded customers. And they are still raising prices.
The means that prices you pay at the pump are going to rise a lot farther than most of the media and pund-ocracy are predicting. And it means that you are gonna see a lot less variance in those prices.
That (relatively) cheap convenience store gas? Kiss that goodbye right now.
As current supplies are replaced by the higher priced delivered gasoline, the Branded stations will have to raise their prices... And many of the Unbranded stations will have to scramble for suppliers who will sell to them- at inflated prices- forcing them to raise their at the pump prices to levels matching or even exceeding the Branded stations... Or, out of gas, simply shut off their pumps.
Although I never- to my knowledge- signed any sort of non disclosure agreement... I won't name names or give specifics here, but trust me. Everyone's speculations about gas prices are low- if things continue to run as they currently are. VERY low.
And this rise in gasoline prices is going to effect virtually everything you do.
Ten gallon tank. Fifteen? Start thinking about what paying $75 every two weeks for gas is gonna do to your budget. Start thinking about how much you travel, where you travel and what you drive.
It's going to get worse.