Ask an expert: Why is oil down but gas up?

MSN Money's Charley Blaine explains the disconnect between these prices and how high they might go.

By MSN Money Partner Feb 25, 2013 12:47PM
The price of oil rose by more than a dollar Monday to surpass $94 a barrel. But that's after oil prices dove last week to levels not seen in several weeks. How then, despite the significant decline in oil prices, are gas prices rising?

In this video, MSN Money's Charley Blaine explains the disconnect between oil and gas prices and how high those prices might go.

Oil prices fell last week after investors became concerned not only about lower global demand in the face of weaker economic data in China and Europe, but also after minutes of a recent policy meeting suggested the Federal Reserve might soon end its quantitative easing measures.

Oil derricks Comstock CorbisWithout the monetary stimulus, the dollar would strengthen, making crude more expensive for international investors. This could not only affect demand for oil, but also cut the supply of funds that fuels the commodities market.

Despite the drop in oil prices last week, gasoline prices rose. In fact, Blaine says, gasoline prices have risen about 15% this year. How is this explained?

Blaine discusses how refineries are a major force when it comes to determining gas prices and how what's affecting the industry as a whole is also impacting gas prices.

In addition, of course, market players such as traders and speculators have also been bidding up oil and gas prices at different times, and taking profits at others, creating the disconnect.

Blaine also projects how high gasoline prices will go and when the peak will be. While he projects a gas price close to the record, he notes that this assumes there is no war in the Middle East, which would invariably cause a spike in oil and gas prices.

The discussion about oil and gas prices and their relationship continues over in MSN Money's Facebook community.

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Tags: oil
67Comments
Feb 25, 2013 2:55PM
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Too much Greed and corruption on Wall Street and in Washington. This economy does not stand a chance of coming back strong the way that it should be. If traders were forced to take full physical delivery of all oil futures, the speculation would not be a big factor in oil prices, but this will never happen as Wall Street has a golden parachute built around them that Congress refuses to go against. Wall Street answers to nobody.
Feb 25, 2013 2:18PM
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Speculators and munipulation of refiners . ie: price fixing
Feb 25, 2013 3:20PM
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The solution is the ballot box.  Every two years, all the House and 1/3 of the Senate should be replaced.  Termites eat the house because the owner refuses to stop the infestation.
Feb 25, 2013 2:44PM
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Yeah, right. Please tell me why then has everybody been talking up that the US has made big strides to supplant the oil we import from the middle east. Aren't we becoming more energy independant? We see this all the time. There is always an excuse for something. Now one of the lame excuses is that the refineries are switching over to "summer" blends? WTF! It is only the end of February! Waiting for the lame excuses when it's $5.00 nationwide average in May. Wait that may be too low. Maybe the Gov't is behind this because the electric/hybrid thing isn't working out?

 

Feb 25, 2013 5:00PM
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Don't worry - Obama will make everything all better......How about some gas stamps to go with those food stamps?
Feb 25, 2013 4:40PM
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The price of gas is up because the sun came up this morning.

 

Feb 25, 2013 4:15PM
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Ask the money expert Mr. Blaine really ! Why is oil going down and gas keeps going up ? One simple reason Mr. Blaine ! The WOLVES ARE OUT TO SLAUGHTER THE SHEEP ! How is that for the afternoon analysis ?

Feb 25, 2013 3:36PM
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Same story as always. No outrage from the Demoncraps this time since it's Obama's watch.
Feb 25, 2013 5:05PM
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Now wait just one cotton pickin minute Smaller Gov !!
We did get
FREE CONDOMS
Gas at double of day one of reign !
Amnesty to illegal's !
Unemployment at 8 % 4 years in a row !
Double the deficit !
All those green jobs !
Transparency !
He went through the budget with a scalpel !
HOW DARE YOU ATTACK DEAR LEADER
You must be a white , devil , evil,  rich,  teapartying mutha fluffa !

Feb 25, 2013 3:59PM
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Ever notice every time the Obama administration fines an oil company that gas prices rise.  Price fixing, of course but all the money the government is getting in fines is being paid by the consumer at the pump.
Feb 25, 2013 5:13PM
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The 1%ers pay 34% of the total income tax after the cuts they received.. The entire middle class only pays 12% of the total, while the lower class pay nothing and are net takers.
Feb 25, 2013 5:00PM
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Do we keep blaming Bush the next 4 years , too ?
I'm new to this game of gubbermint begging, please elaborate the game plan ?
Keep pounding Bush and bow to all things Obama ?
Got it !

Feb 25, 2013 5:36PM
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A mouse farts in Italy and the market drops 200 + points ?
The market is fake , it's built on nothing, none of the fundamentals except a little greed.
Our economy sucks why would the market go up so high if it wasn't manipulated ?
Get out now.
Well, now it's too late for most.




Feb 25, 2013 4:54PM
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I kind of find this funny.  So we blame the refinery for the gas prices.  Oil is a product going in and only one cost of doing business.  You have maintence, wages, supply and depend.   Lets look at it like Pizza.  You have Papa Johns, Pizza Hut, Dominos and other.   Lets say on Super Bowl Sunday Dominos is closed.  You don't think Papa Johns is going to raise their prices. 

What gets me is no one complains about electricity.  Bet no one knows that the power company fuel prices go up and down.  Does you bill go up and down through out the year.  No only summer and winter rates.   Who is getting ripped off in the long run?  And you can't change power companies. 

And in California it cost me to make gas since you have the government more involved.  Look at the taxes on the pump they take about $1.30 from you per gallons.   Does anyone say that the tax is to high?

Feb 25, 2013 3:58PM
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Why should motorists pay for maintenance. Are you an apologist for the oil companies?  This is lunacy.
Feb 25, 2013 4:52PM
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Our government just wants to keep the man down! Simple as that!
Feb 25, 2013 5:19PM
Feb 25, 2013 4:52PM
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ABS....I'm absolutely AMAZED....You finally came over to the DARK SIDE...

 

Wonders never cease...

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