Question
Gasoline prices at the pump go up and down and Oil costs per barrel go up or down, but they do so at different rates
Gasoline "prices at the pump" go up and down and Oil "costs per barrel" go up or down, but they do so at different rates and even in opposite directions sometimes.We want to think that demand and supply controls prices where the cost of crude oil is set by the same economic conditions that determine the price of gas.What are these mismatched trends (graphs of each are shown in the following web links) telling us about how demand and supply work in the market?
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=EER_EPMRU_PF4_Y35NY_DPG&f=A
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=RWTC&f=A
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Understanding the Mismatched Trends in Gasoline Prices and Crude Oil Costs The relationship between gasoline prices at the pump and crude oil costs per barrel is indeed complex and influenced by sever...Get Instant Access to Expert-Tailored Solutions
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