When Jay Ricker, owner of the BP gas station off Interstate 70 in Plainfield, Ind., set the price of unleaded gasoline at $3.44 per gallon Feb. 28, it was 4 cents higher than the Friday before.
That alone might have been irritating to drivers paying the highest gas prices in more than two years. It was even more so because it happened on a day when the price of crude oil, which is used to make gasoline, fell almost $1 a barrel.
What you pay at your gas station depends on an array of factors, from what happens on an exchange in New York to what the competition is charging.
Unlike an iPhone, a pair of jeans or a Big Mac, oil and gas are commodities, and their prices can change every second at the New York Mercantile Exchange and other trading hubs.
Commodity sellers, such as gas-station owners and refineries, price their product based not on what it costs to produce it but on what it costs to replace it.
Oil is the biggest factor in gas prices. It accounts for 50 to 70 percent of the cost. Recent upheaval in the Middle East and strong demand for oil around the world have pushed oil prices over $100 a barrel for the second time in history.
But the price of a gallon of gas rises and falls for a number of reasons. Oil prices can be moved by geopolitics, the value of the dollar, extreme weather or Chinese demand. Gas prices can be moved by oil prices, refinery problems or even weather that might keep drivers at home.
In the next few weeks, gas prices are expected to rise as refiners switch to a more expensive blend of gasoline designed to help protect against evaporation during the summer.
Wholesale gasoline prices have risen 38 cents per gallon, or 15 percent, since the first uprising in Libya on Feb. 15. When wholesale gas prices rise fast, filling-station owners get squeezed or even lose money because competition prevents them from raising retail prices as fast as costs are rising.
