John Lott's Website: World Price of a Barrel of Oil Goes Up Far More than Price of Oil at Pump

4/24/2006

World Price of a Barrel of Oil Goes Up Far More than Price of Oil at Pump

Here is a very interesting graph showing how the price of gas at the pump varies with the worldwide price of a barrel of oil. The price at the pump varies less than the price of a barrel of gasoline, but it is obvious that the price at the pump has gone up much less than the price of a barrel.

5 Comments:

NRAforever said...: That's not surprising, if half of the factors of production double in cost then the cost of your final product only rises by 50 percent. Considering the fact that the price of gasoline is a function of taxes, certain additives, refinery costs, transportation, storage, and oil one would expect oil to represent only a fraction of the cost. Even if oil represents 50 percent of the original cost of gasoline it would take a tripling of oil prices to double the price of gasoline.; 4/24/2006 3:19 PM
Anonymous said...: I wouldn't expect the price at the pump to vary in parallel with the price of a barrel of oil.

One barrel of oil is refined into several products, all of which, depending on the respective markets, will shoulder some proportion of the increase in cost.

So (to pull figures utterly out of thin air) perhaps it is to be expected that as the cost of a barrel jumps by $10, the cost of a gallon of gas jumps by $0.50...; 4/24/2006 3:21 PM
Anonymous said...: Another interesting graph; 4/24/2006 3:33 PM
Anonymous said...: My previous attempts to post this link as html all failed...so you'll have to copy'n'paste it into your browser address bar manually...

Here's another interesting graph:

http://www.washingtonpost.com/wp-dyn/content/graphic/2006/04/21/GR2006042100040.html; 4/24/2006 5:12 PM
John Lott said...: Good comments. I agree that nraforever's comment is correct. Thanks also for the helpful link to the Washington Post.; 4/26/2006 12:08 AM