U.S. Energy Information Administration - EIA - Independent Statistics and Analysis
Frequently Asked Questions
Why don't fuel prices change as quickly as crude oil prices?
The cost of crude oil is a major component in the price of diesel fuel, gasoline, and heating oil. But there are other factors that affect retail fuel prices. Prices are determined by demand and supply in our market economy. Fuel demand is affected mainly by economic conditions, and for heating oil, the weather. Supplies come from refinery production, imports, and stocks (inventories.)
Suppliers price their products based on actual and expected demand relative to available and expected supplies over the short and longer term. Since stocks are the main buffer between short term demand and supply, stock levels are a major factor in fuel pricing.
Reductions in fuel supply, especially when demand is high, can cause prices to increase and to remain high even if crude oil prices drop. On the other hand, even if crude oil prices are increasing, retail fuel prices may not increase as much, or may even fall, if existing and expected fuel supplies are high relative to demand. The rise and fall of crude oil and gasoline prices in 2008 help to illustrate these points:
- Retail gasoline prices increased an average of 82 cents per gallon more in the first seven months of 2008 than in the same period in 2007, while crude oil prices increased by 119 cents per gallon. Adequate supplies and slowing demand for gasoline meant that much of the crude oil price increases were not passed on at the pump.
- High prices caused people to buy less gasoline, and gasoline and crude oil prices began falling in mid-July.
- In September, Hurricanes Ike and Gustav caused several Gulf Coast refineries and a major gasoline pipeline supplying the Eastern U.S. to shut down. These significant supply disruptions drove gasoline prices up in many areas of the country for several weeks, even as world crude oil prices were dropping.
- By mid-October, the supply situation improved and gasoline prices began falling along with oil prices.
Last updated: October 28, 2009
Other FAQs about Crude Oil
- Do we have enough oil worldwide to meet our future needs?
- Does EIA have data on U.S. oil refineries and their locations?
- Does EIA have data on shale (or “tight”) oil production?
- Does EIA have data on the movement of crude oil and ethanol by rail and truck?
- Does EIA have data on the type or quality of crude oil processed in U.S. refineries?
- Does EIA have maps or information on the location of natural gas and oil pipelines?
- How dependent is the United States on foreign oil?
- How many gallons of gasoline does one barrel of oil make?
- How much coal, natural gas, or petroleum is used to generate a kilowatt-hour of electricity?
- How much does it cost to produce crude oil and natural gas?
- When was the last refinery built in the United States?
- Where is the boundary for state and federal offshore oil and gas production?
- Why don't fuel prices change as quickly as crude oil prices?
- Why is the United States exporting gasoline when prices are so high?
- How much of the oil produced in the United States is consumed in the United States?
- How much oil does the United States consume per year?
- How much oil is produced in Alaska and where does it go?
- How much oil is used to make plastic?
- How much petroleum does the United States import and from where?
- What are the differences between various types of crude oil prices?
- What are the products and uses of petroleum?
- What countries are the top world oil consumers?
- What countries are the top world oil net exporters?
- What countries are the top world oil net importers?
- What countries are the top world oil producers?
- What do I pay for in a gallon of regular gasoline?
- What is the difference between crude oil, petroleum products, and petroleum?
- What is the outlook for home heating fuel prices this winter?
- What types and amounts of energy are produced in each state?