The gas price roller coaster

While right now we're finally getting some slight relief at the pump around Michiana, the one thing you can always count on when it comes to gas prices is change.

Prices always seem to be going up or going down on a whim and we're left riding on the rollercoaster. Then when they go way up like they did a few weeks ago we certainly all feel the pinch. So why are prices always changing?

These days it's hard to predict the cost to fill your tank, each week seems to be higher or lower than the week before.

For oil industry watchdogs, you don't look at your neighborhood station to predict the future.

"This isn't gas station owners all getting together and deciding to raise the price, they are raising their price because their prices went up," says Charles Langley a gasoline analyst.

So where do these higher prices start? The price is often set at the refinery level.

When gas prices go up it's usually not at the whim of the gas station owner, it's often because some sort of change or problem at the refinery level.

"The name of the game for them and the challenge is not to produce too much gasoline because if they produce too much the price will go down," says Langley.

Gasoline analyst Charles Langley says when there is a refinery disruption of any kind, gas prices often start rising.

"Exxon ran out of fuel because they had to shut their refinery down for safety reasons, and they had to go out on the spot market and they had to buy as much surplus gas as they could," says Langley.

As a result, wholesale prices made a quick jump. They'll settle down but not before some drivers take a financial hit. Our refineries are making less fuel than they used to, and whether it's planned maintenance, a change of a fuel blend or a safety issues. The people behind the wheel often pay the price.

Now when gas prices go up, some people think gas station owners are making more money, but it's just the opposite.

They have to cut their margin of profit to keep customers coming in. Sometimes they'll even take a loss on the gas, hoping to make up the difference in the convenience store.


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