Oil Prices trending down but……

Cesarmx

Cesarmx

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Crude oil prices have been trending down for almost a month from their highest this year but very little change at the pump for regular and 100LL! ……….When oil goes up we feel it a the pump almost immediately but when it goes down……..keep on waiting to see a drop!
 

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There was more of a lag in price increases at the airports I fly to than at local car gas stations. That's probably due to the fact that fuel in airport tanks goes longer between tank refills, so the cheaper fuel is in the tank longer. That would also delay price decreases since no FBO or fuel farm manager will ever sell what they have in the tank for less than they paid for it.
 
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I would think by now 100LL would have caught up but from what I've been seeing both 100LL and car gas went up close to $1.25/gal. But proportionally speaking going from ~$2.75 - ~$4 hits a lot harder than going from ~$5.25 - ~$6.50. Flying almost feel like the economical choice now.

Is the higher price of avgas vs car gas largely due to fixed costs? That's the only way it makes sense to me.
 
President Bush 41 shortly before the Gulf war in 1991 called it “price gouging” ( when fuel prices started going up even before the war started) and stated he will stop it……well, every time there is a conflict in the Middle East ever since fuel prices go high very fast ……….guess, oil companies are more powerful!
 
Prices go up when FBO tanks are refilled with fuel that reflects the market price. Demand drops on the marginal flyers, so the tank empties more slowly than normal. FBO isn't going to sell $7 fuel for $4 and eat the loss. So prices take longer to drop than they do to rise. This gets exacerbated when one airport gets a delivery at lower prices and folks tanker to it vs their local airport. They'll eventually drop, but not as fast as they rise. No conspiracy, just basic economics.

Moves faster in car gas as demand is orders of magnitude higher and stations have to eat selling higher cost fuel at lower prices due to station next door. Difference is the loss is over a day or two and a small fraction of the supply tank vs weeks or months and a nearly full avgas tank.
 
Just because crude prices decrease doesn’t mean distillate prices decrease. Crude can go to $35 a barrel, but if demand for refined products exceed refining capacity the price won’t move. Also diesel fuel remains largely unchanged and the cost to transport 100LL remains high.
 
Give it time. Prices from the supplier change weekly. While Jet fuel reacts quickly, Avgas moves a lot slower and seems to have a 3-4 week lag.
 
Cesarmx said:
Crude oil prices have been trending down for almost a month from their highest this year but very little change at the pump for regular and 100LL! ……….When oil goes up we feel it a the pump almost immediately but when it goes down……..keep on waiting to see a drop!
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Hang 4 said:
Prices go up when FBO tanks are refilled with fuel that reflects the market price. Demand drops on the marginal flyers, so the tank empties more slowly than normal. FBO isn't going to sell $7 fuel for $4 and eat the loss. So prices take longer to drop than they do to rise. This gets exacerbated when one airport gets a delivery at lower prices and folks tanker to it vs their local airport. They'll eventually drop, but not as fast as they rise. No conspiracy, just basic economics.

Moves faster in car gas as demand is orders of magnitude higher and stations have to eat selling higher cost fuel at lower prices due to station next door. Difference is the loss is over a day or two and a small fraction of the supply tank vs weeks or months and a nearly full avgas tank.
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Understand FBOs are there to make a buck. But when an FBO buys a new load of avgas when crude oil price was low and then due to the volatility of the market, and for any other reason , the following week the crude price goes even higher -and the demand continues being high-, who or what will prevent them from increasing their prices - with same cheaper avgas load- and make $1-$2 extra profit margin? Yes, some would probably say this is an open free market system,
 
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Cesarmx said:
who or what will prevent them from increasing their prices - with same cheaper avgas load- and make $1-$2 extra profit margin?
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Probably the same thing that prevented them from raising their prices for extra profit before crude went up.
 
Cesarmx said:
But when an FBO buys a new load of avgas when crude oil price was low and then due to the volatility of the market, and for any other reason , the following week the crude price goes even higher -and the demand continues being high-, who or what will prevent them from increasing their prices - with same cheaper avgas load- and make $1-$2 extra profit margin?
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Who or what should be involved in that? I'd say customers and suppliers are pretty much it. Price controls worked so well in the '70's oil crisis. For a short while there was a station in Boston that charged about 3x what everyone else was. There were no lines at that one, people who valued time more than price would buy there. Everyone else was stuck in 20 to 30 minute lines, assuming there was any gas at all. They got "charged" with price gouging they lowered their price and voila there was a line at that station too. BTW at that time, I was a college student, so I waited in the line as my time was not that valuable. I had no quarell with the station or the customers who chose to buy their gas there.
The market tends to work pretty well.
 
While the Iran war (or Conflict) “seems” to have an end and when WTI and Brent crude prices are now close to $80, we shall see how soon the markets tend to adjust down; I don’t hold my breath, more than likely it could be weeks if not Months, and may never again be at pre war or conflict prices (ouch!).
In my area, SE TX ( 60 nm from the Energy corridor of Houston!!), current Avgas is $5.50-$7.80 and Regular gas sells for $3.60-$4.30.
As a baseline in February 2026 they sold for $3.30 for avgas and $2.30 for Regular in my base airport and home airport!

What are your gas prices in your areas?
 
Cesarmx said:
As a baseline in February 2026 they sold for $3.30 for avgas and $2.30 for Regular in my base airport and home airport!

What are your gas prices in your areas?
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In North Georgia, 87 octane auto fuel is ~$3.50-$3.75. Avgas is 6.25-$6.50 at the GA friendly places. At the Metro Atlanta fields, $8-$9 is fairly common for Avgas.
 
kyleb said:
In North Georgia, 87 octane auto fuel is ~$3.50-$3.75. Avgas is 6.25-$6.50 at the GA friendly places. At the Metro Atlanta fields, $8-$9 is fairly common for Avgas.
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Getting very close to Europe prices for Avgas in the metro areas!
 
kyleb said:
In North Georgia, 87 octane auto fuel is ~$3.50-$3.75. Avgas is 6.25-$6.50 at the GA friendly places. At the Metro Atlanta fields, $8-$9 is fairly common for Avgas.
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Seriously?? I'm in the wrong part of the country. 87 here is almost $6.50 and that's a price you have you to look around for. Guess I'm moving to Georgia.
 
FrequentPilot said:
Seriously?? I'm in the wrong part of the country. 87 here is almost $6.50 and that's a price you have you to look around for. Guess I'm moving to Georgia.
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Sorry, we're all sold out for the forseeable future. ;-)
 
Filled up at a Costco in NoGa yesterday, $2.95. Throw in the 5% discount for using the Costco Visa card and it was $2.80.
 
Hang 4 said:
Prices go up when FBO tanks are refilled with fuel that reflects the market price. Demand drops on the marginal flyers, so the tank empties more slowly than normal. FBO isn't going to sell $7 fuel for $4 and eat the loss.
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Ha! Yeah. Doesn’t stop them from jacking the price on the fuel sitting in the tank when oil goes up overnight though. During Covid stores just went out and put higher prices on “stuff” sitting on the shelves.

Bunch of horse puckey!
 
mryan75 said:
Ha! Yeah. Doesn’t stop them from jacking the price on the fuel sitting in the tank when oil goes up overnight though. During Covid stores just went out and put higher prices on “stuff” sitting on the shelves.

Bunch of horse puckey!
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Absolutely, dishonest retailers - and there are plenty of those in Aviation too- with that kind of stuff and nobody can stop them!
 
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mryan75 said:
Ha! Yeah. Doesn’t stop them from jacking the price on the fuel sitting in the tank when oil goes up overnight though. During Covid stores just went out and put higher prices on “stuff” sitting on the shelves.

Bunch of horse puckey!
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To their credit, my local airport changes prices only when they get a new load of fuel. This is great when we're still using cheaper fuel and prices have risen, but kinda sucks when prices have fallen. We recently got a notification that the new load has dropped prices to $6.65/gallon, thanks to a visiting B-17 and B-25 burning through the current stock. One extra reason to give those old birds a salute as they pass!
 
mryan75 said:
During Covid stores just went out and put higher prices on “stuff” sitting on the shelves.

Bunch of horse puckey!
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Cesarmx said:
Absolutely, dishonest retailers - and there are plenty of those in Aviation too- with that kind of stuff and nobody can stop them!
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COGS is not the only cost that determines pricing. Operating costs have to be accounted for. If indirect costs go up or sales volume goes down, unit price has to go up or the business operates at a loss.

Let me put it in terms an 8 year old can understand. You and all the other customers of a store pitch in to cover the cost of rent. If the number of customers is cut in half because they are afraid of getting sick, then the amount each contributes must double.
 
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Leaving out the FBO's at Jet focused airports, it's a cash business. With prices going up dramatically, the next load they buy is going to cost a lot more. They have to pay the supplier up front, then wait for the fuel to sell to recover that higher cost. However, employees still need to be paid, utilities etc. So yes, if I ran an FBO, I'd raise prices on part of a fuel load that I bought at a below current market price if I expected the next load to be at a significantly higher price.
The ability to do that is not infinite however, there's a point at which either pilots stop flying or they tanker from another airport with a lower price.
The exception is the Class B and some C airports near large cities who get so much jet business, they don't care about piston and price accordingly. Still a market driven price and while I don't like it, I also don't buy from them unless I have a very compelling reason to be there.
 
Hang 4 said:
The exception is the Class B and some C airports near large cities who get so much jet business, they don't care about piston and price accordingly.
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They likely have higher indirect costs as well. Glass and marble pilot lounges and line crews on standby are not free. If you land and a flagman in a golf cart parks you, the price of your fuel covers that cost, as well as the hot girl at the counter and the massive GL insurance premium. It all adds up. Way different business model than the decrepit small town FBO with a kid pumping gas for flight hours.
 
The two examples in my area both kept the cheap prices for the duration of the tank. And I think the third location did as well. Admirable.
 
Ed Haywood said:
COGS is not the only cost that determines pricing. Operating costs have to be accounted for. If indirect costs go up or sales volume goes down, unit price has to go up or the business operates at a loss.

Let me put it in terms an 8 year old can understand. You and all the other customers of a store pitch in to cover the cost of rent. If the number of customers is cut in half because they are afraid of getting sick, then the amount each contributes must double.
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I’m no economist but I’m fairly certain that if there’s less demand, prices go down, not up. Point is, when the price of oil goes up they jack the price in the stuff they’ve had sitting in the tanks for a week. When the price of oil goes down the price of the stuff they’ve had sitting in the tanks stays right where it is.
 
Crude Oil prices are now almost to what they were back at the pre conflict level in February 2026………in the$60s per barrel…..but at the Av gas pump not much difference from 2-3 months ago…….guess the FBOs are still having to sell off their high oil price inventory from 2-3 months ago………hmmmmmm….
 

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