(NEXSTAR) – A glimmer of hope appeared for drivers Tuesday as the price of oil dropped back below $100 per barrel. Yet gas prices remained high, averaging $4.32 per gallon nationwide, according to AAA.
Just a week ago, the price of a barrel of oil was substantially higher – over $130 – but gas prices were actually lower, at $4.17 nationwide.
What gives?
There’s a lag between changes in oil prices and changes in prices at the pump, and that lag is even slower when prices come down.
When the price of oil starts to rise, you’ll see gas prices rise a few days later, as stations pass on that hike as quickly as possible to avoid losing money. A big spike in crude oil prices is typically followed by a gas price spike three to five days later, explained Patrick De Haan, lead petroleum analyst at GasBuddy.
When crude oil prices start to fall, gas stations might not be in as big of a rush to cut prices.
“Essentially, gas stations often take losses when oil prices rise so quickly, because they cannot dramatically increase pump prices due to local competition,” said Nicole Petersen, a GasBuddy spokesperson. “When oil prices drop, stations take a little bit more time to lower prices as to recoup any losses taken when oil prices rose quickly.”
There’s still a big incentive for gas stations to cut prices, though – to steal away customers from their competitors, said Petersen.
As crude oil prices have been falling for about a week, Petersen expects to see the effect trickle down to your local gas pump in the next three to five days.