BUFFALO, NY (WKBW) — The cost per barrel of oil has dropped to double digits, but you’re still not feeling any major change at the pumps.
“The national average actually dropped by a penny since yesterday even though it's up when you consider the whole course of the week,” explained Elizabeth Carey, public relations director, AAA of Central & Western New York.
Carey says unfortunately gas prices always rise a lot faster than they drop.
Gas stations set their own prices based on supply and demand.
Prices at gas stations across Western New York have remained relatively stable while the price of a barrel of oil has significantly dropped.
“They're $99 a barrel right now. They were $30 a barrel in August, but still, they went up to about $130 a couple of weeks ago, so that's what really brought up those prices,” Carey noted. “Unfortunately, sometimes the prices rise a lot faster than they drop."
“That's only half of the money that goes into what you pay at the pump — half of it, so it's important — but you're not going to see that same yield. When you do see any yield on the price because the other half is everything else,” explained Natalie Simpson, chair of operations Management & Strategy, UB School of Management.
Simpson keeps a close eye on this topic. She tells me the other issue is the country's domestic supply is not bouncing back yet.
“There is kind of this strange sluggishness in the change of prices and the competitiveness,” remarked Simpson.
But Carey says there is another reason why you're not seeing prices return to more reasonable prices.
“These gas stations bought their supply at their wholesale price, that was higher. When they get their next wholesale delivery, maybe the price will be a little bit lower and then they'll lower the prices — but they might be trying to offset what they already paid for,” responded Carey.
Demand will start to increase again with the summer season travel season right around the corner.
Refineries are now switching to a summer blended fuel which is more expensive to produce.
“Normally demand plays a big role,” Carey replied.
“Is there any hope that it will drop below four dollars?" Buckley asked Simpson.
“It’s not like I have a crystal ball — but if I had to bet money — no — no, I’m not betting on that,” laughed Simpson.
The highest gas prices of the year usually occur around Memorial Day. Unfortunately, the experts tell me they fear the higher prices could be around for a while.