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Old 05-02-2007, 12:27 PM   #132
Donger Donger is offline
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Quote:
Originally Posted by Bowser
So gas is less expensive per barrel today than when it was 3 bucks a gallon. But in the span of a year, our demand has risen so sharply that gas companies have no choice but to raise prices? I have no idea on how to refute that, but I'm not sure I buy that.
No.

Crude oil is $10 less expensive per barrel than it was when gasoline was last at $3 per gallon. That means that gasoline shouldn't be near $3 per gallon now, right?

Wrong.

Refineries are operating at ~88% capacity right now. The last time gasoline was near $3/gallon, they were operating at near 100% In other words, the present high price of gasoline has more to do with refining capacity (or lack thereof) than it does with the price of crude.
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