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Oil Prices Drop, Experts Don’t Expect Gas Prices To Follow

By Jim Armstrong, WBZ-TV
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BROOKLINE (CBS) – Oil prices may have taken their biggest one-day tumble since April, 2009 but that won’t translate into lower gas prices at the pump, at least not immediately.

That’s something that frustrates a lot of drivers who notice that gas prices seem to jump the very day crude oil prices increase, but it doesn’t work the other way around.

WBZ-TV’s Jim Armstrong reports

“The numbers on my price sign are controlled by the oil companies and suppliers,” explained Elias Audy, owner of the Mobil station on Route 9 in Brookline.

“They decide what to charge in what area.”

Audy says his customers look at him, “like we’re jerks, with disbelief,” he said, when he tries to explain how little control he has over his prices.

The oil companies and the wholesale suppliers, Elias said, leave him little wiggle room, and diminishing profits.

As for when motorists might see some of the benefit from today’s lower crude prices, Elias isn’t hopeful. He agrees that oil suppliers are much faster to take advantage of price increases than they are to acknowledge decreases.

“If it goes up 10% they will jack it up 10%,” he said. “But if it goes down 10%, we’re not seeing that.”

Business analyst Peter Cohan says that behavior is to be expected.

“The price of gasoline will remain high even after the price of oil drops,” said Cohan, who also teaches at Babson.

“This is the industry’s way of milking the last drops of profit from an oil price spike.”

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