As I stare at the gas price boards, I often wonder why the prices haven’t ticked as low as I see the cost of a barrel of oil dropping. Oil prices have dropped 25%, while the average gas price has only dropped about 12%. Why?

It looks like suppliers took a hit when the prices peaked.

“Had the cost of gasoline kept up with the cost of crude … gasoline prices at the peak should have been 20 percent to 25 percent higher,” said Flynn, adding that refiners had to eat a lot of the rising costs and “are trying to make back some of the money as prices go back down.”

So now they are trying to recoup their money as the price of oil falls. There are lots of facts related to this topic in this article: Gas prices not falling as fast as oil’s drop. It answered a lot of my questions. I still wonder though, how oil companies are still making record profits if they took such a bad hit back when the price of oil peaked.