Oil Is Down, So Why Is Gas Going Up?

Consumers Cry Foul, But Oil Industry Says Not So Fast

So how do oil prices fall but gasoline prices rise in many parts of the country?

One explanation offered: with 15 refineries that consume nearly 4 million barrels a day shut down, there is less demand for oil. Less demand means that prices drop.

That, combined with the belief that oil platforms in the Gulf of Mexico were probably spared Hurricane Ike’s wrath (though the judgment is a bit premature since oil companies are just starting to evaluate oil platforms for any damage), leads oil traders looking to future months (October, November) to expect that the oil industry will come through this storm with less damage than expected.

And while OPEC recently said its members would only produce what they are supposed to produce, meaning a reduction of nearly 500,000 barrels a day in world supply, Saudi Arabia quickly gave a wink and a nod to oil markets, indicating it would keep on producing more oil, which happens to be about 500,000 barrels a day.

ABC News