Why gasoline follows oil up but not down

[jpak]

http://money.cnn.com/2007/01/12/news/economy/gas_prices/index.htm

NEW YORK (CNNMoney.com) -- If it seems like gasoline prices are quick to skyrocket when the price of oil goes up, but then take their sweet 'ol time coming back down when crude prices sink, the answer is simple: They do.

"There is a rocket and feather aspect," said Tom Kloza, chief oil analyst at the Oil Price Information Service.

The country, which has one of the largest reserves in the world, could pump 6 million barrels a day or more. But that sure isn't happening now.

And the reason seems to be simple economics.

The service stations are still selling the same amount of gasoline when wholesale prices fall, said Kloza, "so there's no reason to drop."

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[Fovea]

1. You want to talk about an addiction to oil?

Not even heroin follows this model.
Not pot.
Not crank.

When the supplies of drugs go up the price goes down, or quality up, to attract new customers. But not gasoline. Gas dealers know they have districts where the market is not only stable, but guaranteed. They don't have to deal with anything but brand loyalty.

Note to drug dealers... start branding.

Note to suburban/exurbanites... mass transit.