How the cost of a barrel of oil affects what you pay at the pump

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How the cost of a barrel of oil affects what you pay at the pump

By PAT BAILEY

Story Created: Oct 14, 2008 at 4:43 PM EST

Story Updated: Oct 14, 2008 at 5:12 PM EST

UTICA, N.Y. (WKTV) - The cost of a barrel of crude oil Tuesday morning was $80.84. According to Ed Welsh, of A.A.A., only 42 gallons of a barrel of oil is used for gasoline.
Welsh says by doing quick math, on an $80 barrel of oil, the gasoline portion cost $1.90. However, there are of course other costs. Those other costs include a refinery, transport and retail charge of $0.50.
Then there is your tax charges. According to Welsh, the federal, state and county taxes combined, equals another $0.63 per gallon.
"So if there were no taxes on your $1.90 a gallon crude oil, you would be right at $2.40 a gallon today," said Welsh.
Some gas stations around Utica have gasoline above $3.20, while others are closer to $3.00. Welsh says that is all dependent upon when the gas station bought their latest shipment.
"It is important you realize that because oil that was taken possession of a month ago or 6 weeks ago, were burning now," said Welsh.
"So when you say it is $80 a barrel how come it's not $2.50 a gallon? That's because were still burning oil that was $120 a barrel."

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Wednesday, Oct 15 at 9:33 PM MVOr wrote ...

I think it is very interesting that gas goes up in price by leaps and bounds. When the price of a gallon drops, it is a penny or nickel a gallon per day. Let us not forget that retailers have used their increased delivery costs for the price increases they have passed on to the consumer. Has anyone noticed that although fuel prices are ebbing, that your groceries are still sky high?

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Wednesday, Oct 15 at 11:33 AM Oil Guy wrote ...

There are 42 gallons of crude a barrel. Almost half of this will be refined into gasoline.

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Wednesday, Oct 15 at 9:32 AM Amazed wrote ...

Very misleading story. I still can't understand why people don't get as mad at taxes as they do oil companys. Oil companys profits are less than 10%. Yes the profit number in dollars is big, but that's on 400 billion in sales and thay's not all on gas. Taxes take more than the oil companys. And how many middle people making a profit is there?

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Wednesday, Oct 15 at 9:25 AM wrong prices now wrote ...

OIL@$80 THE PRICE OF GAS SHOULD BE IN THE $2.50 RANGE. PEOPLE WE ARE GETTING ROBBED. RIGHT IN FRONT OF OUR FACES AND WE DO NOTHING ABOUT IT BUT WE STILL ELECT THEIFS TO RUN THIS COUNTRY. SHAME ON US.

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Wednesday, Oct 15 at 9:04 AM GOLD wrote ...

This doesn't add up! Let's take gold for example. If I mine a lump of gold out of the earth today and let's say for example it is $400/oz and tomorrow gold goes up to $410/oz. Is my lump of gold still only worth $400/oz because it came out of the earth yesterday before the market put it up to $410/ox.???? IT's SUPPLY AND DEMAND PEOPLE. DON'T LET ANYONE DOUBLE TALK YOU TO BELIEVE OTHERWISE.

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Wednesday, Oct 15 at 8:33 AM concerned wrote ...

Why is there a lag at the pump when the price per barrel drops but no lag when the price increases?

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Wednesday, Oct 15 at 7:54 AM Wdnhrs wrote ...

Why then, when the price is on it's way up do we see a pump price reflecting 120.00 immediately when we're still burning oil that was purchased at 80.00??? Your theory only works when the price is dropping???

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Wednesday, Oct 15 at 7:33 AM Consumer wrote ...

well that's a load of B.S. So then why did the price jump sky-highin a matter of days, when it hit $120 a barrel, when we were still burning oil that was taken possession a month prior (that was $80 a barrel) Don't give us that replacement cost stuff either.... GET REAL PEOPLE

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Wednesday, Oct 15 at 7:26 AM wad wrote ...

they have a good explanation why gas prices drop slowly, but when prices were skyrocketing the excuse was based on oil prices for that day. they also used excuses like pending weather or tension between opec. drill, drill drill, use our oil first and buy from opec later.

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Wednesday, Oct 15 at 7:23 AM Not so fast!!! wrote ...

I learned once that the price of oil/gas was based on SUPPLY AND DEMAND, not the market price per barrel. Odd how when the market was going up up up we saw instant increase in price, but when it goes down we have to think about what the market price was 6 weeks ago. This still doesn't make sense. Nice try to justify the price of gas, but as usual you're way off base. We are simply being hosed by the oil companies!

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Wednesday, Oct 15 at 6:45 AM DA-Camden wrote ...

OK, Let me see, futures prices rises, gas prices shoot up overnite. Futures prices drop, gas prices drop fractions of a cent...gee doesn't that sound fair??? I can see the initial raise, the stations need to be able to pay for what's to come, but after that, as prices come down, still sounds like profiteering to me.

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Wednesday, Oct 15 at 6:14 AM confused wrote ...

If this is accurate...why is it everytime a disaster hits we see fuel prices jump! We are always told that we pay the speculated price for what oil will cost in the future. It is nice to know that now we have the supposed authority figure on the matter aiding in the big Oil raking in record profits while we find it harder and harder to make ends meet. I would ride a bike from now on if only the roads were in better coindition and I thought I'd be safe.

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Tuesday, Oct 14 at 11:09 PM Dave wrote ...

Great in theory, but not in actuality. The price of gas may not be going down as quickly as we hoped, as you mentioned on WKTV, because it was bought by the gas stations maybe weeks ago. But that doesn't really hold water (or gas) since the prices have gone UP 2 and 3 times in a day, sometimes several times in a week. So according to your theory, gas prices should wait a few weeks to go UP as well. Doesn't happen. Let's not kid ourselves.

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Tuesday, Oct 14 at 9:26 PM Confused wrote ...

If we use gas that is a month or 6 weeks old, then why did the price of gas go up so fast when the price of oil went up ????? Please explain.

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Tuesday, Oct 14 at 7:10 PM YTMND wrote ...

Mr. Welsh has but one weakness....explain the opposite scenario. If oil goes up to 120 a barrel tomorrow you bet your trunk that they'd raise the price per gallon immediately. So we'd be paying 4.50 a gallon on that oil that was bought 6 months ago.

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Tuesday, Oct 14 at 6:51 PM HaHaHa ! wrote ...

The AAA reps comments have Big Oil's fingerprints all over them. Oil went up, gas increased at the same time. Now oil price drops and the excuses to rob us at the pumps continues. Go to Old Forge and they use the excuse that transportation costs are the reason for gas prices to be high. Everyone knows that it costs $15,000 per truckload for gas to be transported. The dealers up there should be loaded the way that they rip off visitors to the area. We all should boycott Byrne Dairy and Fastrac !

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Tuesday, Oct 14 at 6:50 PM Odd wrote ...

Why is the price of gas does not go down quickly? AAA states it's because the gas station owners are still pumping the higher priced gas from their supply. However, when there is an increase, you see that immediately. They are milking us for everything they can and nobody does a thing about it.

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Tuesday, Oct 14 at 6:41 PM Don wrote ...

First Welsh said that is all dependent upon when the gas station bought their latest shipment. This wasn't the case when they raised the price of oil over $ 1 in one day, so let's cut the baloney. Big oil still makes big bucks and only now , after Mr Welsh's statements does it sound like Big oil = A big case of price gouging !

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Tuesday, Oct 14 at 6:09 PM ian giudilli wrote ...

The fact that oil is still expensive due to purchase date is hogwash-gas stations have no problem hiking prices daily when they're on the rise

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