Why Gas Prices Rise & Oil Prices Drop

TYLER - Have you ever wondered why gas prices go up when the cost of oil goes down?

The answer is easy— what we're paying today at the pump, is what a barrel of oil cost about two months ago.

The good news is, it looks like these prices will continue to stay low.

John Carr is the President of Carr Resources, Incorporated in Tyler.

It's a company that finds oil and gas.

Carr says, the reason gas and oil prices don't always make sense— is easy.

Gas prices you see now comes from oil prices two months ago.

Carr says, "From when it's produced, to the pipeline, to when it arrives at the tank storage, until it goes through the refinery, and then in a tanker truck to a local gas station— is 30 to 60 days away."

Right now, a barrel of oil is about 35-bucks.

This means, according to Carr, in March, we'll be paying about a $1.60 a gallon or so at the pump.

A low price, Carr says, we'll probably keep paying all of this year— and even into the next 15.

The reason?

Too much oil.

In fact, companies are over-producing.

Carr says, "I've heard all tankers are full. They are sailing over here slowly. There's not enough markets in consuming nations for all oil produced."

The good news is, we're saving money.

Mariang Creag likes the idea of that!

Creag says, "It's wonderful. I'm from the old school, when we could take 5 dollars and fill up a gas tank."

Carr says the average person will save about 11-hundred dollars a year.

Carr says, "They are going to save 200-billion dollars in gasoline prices."

If you think about it, that's equivalent to an economic stimulus package.

The bad news is, Carr says, every time there is an oil boom, there's an oil bust.

We had our boom— when the gas prices were more than 4-bucks a gallon.

Unfortunately though, Carr says, a bust could be on its way.

Carr says, "It's really slowly destroying our industry, having very low gas prices for periods of a time."

If gas prices continue to stay this low, Carr says, hundreds of thousands of people who work in the oil industry in Texas could lose their jobs.