Do Gas Prices Really Follow Oil Prices?

A Six-Month Look at the Numbers

A recent conversation at the local coffee shop raised a theory — not a new one, but one that never seems to go away:

“When oil prices go up, gas prices jump overnight. But when oil drops? Nothing happens.”

It’s a familiar frustration, especially for seniors on fixed incomes.

But is it true? Are we just imagining the imbalance — or are we witnessing something real?

Rather than guess, we pulled six months’ worth of data to see for ourselves.

The Numbers: Crude Oil vs. Gas Prices

Here’s what the numbers show — U.S. crude oil prices (in blue) and average gasoline prices (in red) from December 2024 through June 2025:

Two clear moments seem to support the popular hypothesis:

January: Crude oil jumped several dollars per barrel in just two weeks. Gasoline prices rose — but not as quickly, and not by the same percentage.

March: Oil prices steadily fell. Gas prices, however, declined much more gradually and took longer to reflect the change.

This pattern — fast rise, slow retreat — is so common that economists actually have a name for it: “Rockets and Feathers.”
Prices shoot up like rockets when crude rises… and float down like feathers when it falls.

Why the Discrepancy?

There are valid explanations:

Gas stations price fuel based on the inventory they already have.

• Refining, transportation, and taxes all factor into final pump costs.
• Oil is traded on futures markets, meaning today’s barrel price doesn’t always reflect today’s supply.

But even with all that, the pattern raises eyebrows.

If oil spikes and gas prices adjust within days…
Shouldn’t the same thing happen in reverse?

Here’s the catch:

• When oil prices rise, gas stations raise prices immediately, anticipating higher replacement costs.
• When oil prices fall, stations delay lowering prices until they’ve sold off their current inventory — bought at the earlier, higher cost.

In short:

You’re charged based on future costs when it hurts you, but on past costs when it could help you

What’s Really Going On?

Inventory Timing

A station may have paid $85 per barrel for its last delivery.

Even if oil is now at $78, they won’t drop prices until the $85 fuel is gone.

Rocket and Feather Pricing

Pump prices rise quickly when oil spikes

But they drift down slowly when oil dips — a well-documented pattern.

Speculation & Futures

Oil trades on long-range contracts

Pump prices reflect anticipated changes, not necessarily current supply

Local Market Competition

If no station in town lowers prices, there’s no incentive to be first.

So… Are We Being Ripped Off?

Not legally. But emotionally? Logically? Absolutely.

It’s legal.
It’s common.
And yes — it feels unfair.
When oil goes up, you pay today for tomorrow’s fuel.
When oil drops, you’re still paying today for yesterday’s delivery.

That may not be a rip-off in the legal sense…
But it sure smells like one in the real world.