Just two weeks ago, gas prices were rising as much as 20 cents in a day, reflecting a sharp spike in oil prices.
With oil prices retreating below $110 per barrel, prices at the pump have started to come down, but only a bit.
According to AAA, the price of gas has fallen a penny a gallon over the last four days, to an average of $4.32 a gallon for regular. A week ago it was $4.32 and a month ago we were paying $3.60 a gallon.
But why don't prices drop as quickly as they rise?
Energy experts have a name for it: Rockets and feathers.
Gas prices go up like a rocket, but fall like a feather.
While the price spikes are rooted in profit and demand to a certain degree, there is a bit of profiteering at play as well and the media plays into it.
News reports about the rise in oil, trigger consumers to brace for the effect at the gas pumps. Gas companies raise prices, in part, as an opportunity, but also in anticipation of having to buy oil for refining at a much higher cost.
Gasoline retailers pass the cost onto drivers.
A report by the St. Louis Federal reserve underscored the effect.
"Since people do not tend to observe gasoline prices until they are ready to refuel their gas tanks," the report says, "Consumer expectations may be slow to adjust to pricing changes, allowing prices to remain relatively high."
Industry analyst Patrick De Haan from GasBuddy.com has published several charts that also demonstrate the rapid rise and slow fall of gas prices and their link to oil as well as the effects of political events and the pandemic.
De Haan believes there is room for gasoline prices to fall as much as 55 cents per gallon over the next month, provided oil prices keep falling.
However, much of this is pure speculation at this point. What is true, is that higher gas prices are here for certainly the short term. A year ago, we were paying less than $3 per gallon, and a return to that is unlikely any time soon.
Eric Scott is the senior political director and anchor for New Jersey 101.5. You can reach him at eric.scott@townsquaremedia.com
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