Also, Three weeks ago the price per barrel was sitting in the 100-teens, but the highest price in my town was $3.99 a gallon. Then the barrel price went down into the upper 80s and the gas price went back down to $3.80 here. Then this week, jumped up to $4.19. Even though, right now, WTI is $95 and Brent is 101.
I asked my AI why this was so.
The reply:
The key point:
Gasoline prices follow refined gasoline markets, not crude oil directly.
And right now, refined gasoline is tight even though crude is cheaper.
This is why your local price can go higher even when Brent/WTI go lower.
π₯ 1. Refineries are the bottleneck right now β not crude oil
This is the big one.
Even if crude drops, gasoline can rise if:
refineries are down for maintenance
refineries are running at reduced capacity
refinery margins (βcrack spreadsβ) are high
regional supply is tight
Right now, U.S. refineries are in spring maintenance season, which always reduces output.
Less gasoline supply β higher gasoline prices, even if crude is cheaper.
This is why the Marathon on the hill can jump to $4.19 even though Brent is ~$101 and WTI ~$95.
π’οΈ 2. Gasoline futures (RBOB) have been rising even while crude fell
This is the part most people never see.
RBOB gasoline futures β the benchmark for U.S. gasoline β have been rising due to:
summer-blend transition
refinery outages
tight inventories
higher demand as weather warms
So even though crude is down from its earlier highs, gasoline futures are up, and stations price off gasoline, not crude.
π‘οΈ 3. Summer-blend gasoline costs more to make
Every year, around AprilβMay, refineries switch to:
summer-blend gasoline
lower vapor pressure
more additives
more expensive components
This adds 15β30 cents per gallon to wholesale prices even if crude stays flat.
Your timing matches this perfectly.
π 4. Regional supply matters more than national averages in your town in Alabama is supplied by:
the Colonial Pipeline
regional terminals (Montgomery, Opelika, etc.)
local wholesale rack prices
If your region has:
a tight supply
higher wholesale rack prices
fewer deliveries
higher demand
β¦your local price can spike even if national crude prices fall.
This is why your Marathon β already a highβpriced station β jumped to $4.19.
π¦ 5. Stations raise prices faster than they lower them
This is called rockets and feathers:
Prices go up like a rocket
Prices fall like a feather
When wholesale gasoline rises even a little, stations raise prices immediately.
When wholesale falls, they take their time lowering it.
π§ Putting it all together for your situation
A few weeks ago:
Brent/WTI were higher
Gas was $3.99
Now:
Brent/WTI are lower
But gasoline futures are higher
Summer blend is in effect
Refinery output is tight
Regional supply is tight
Stations are padding margins
β Gas is $4.19 even though crude is cheaper.
This is exactly what the market does every spring.
The price at the pump is always the one that creates the impact. Some commentator said the price of gasoline is like the price of gold--marked to market. The gas station buys it at a current price--but can change its sign price "Up" when the market goes up--but it's extremely rare to see the sign price come down due to the daily market coming down. The gas station's in-ground tanks are holding the higher-priced gas they earlier paid for.
Very confusing--but it all comes down to swiping your credit card and seeing the total price printed on that little white receipt.
This is when the car/truck owner registers increasing anger as that total bites deeper into his bottom line.