Here in Oregon we are about $3.29 but my Mom in Iowa keeps bragging about $2.29 for gas there.

Yeah, but she lives in Iowa. I would rather pay the higher gas prices.

3.01 1/2 mile from my house yesterday.

I'm not usually a conspiracy theorist, but it is bothersome to me that oil has dropped 50% and gas has only dropped 25%.

Wouldn't the answer be the same that is applied to the question of why gas is so expensive in the first place- refining? I imagine it takes time to refine, and it will be a while before oil refined now hits the market. I don't buy that argument, but that's all we've heard when people question why gas costs so much in the first place and criticize the oil companies for price gouging. I suspect it's really the same phenom that affects grocery prices- 'price stickiness'. (Greed).

I have been meaning to do a price of oil vs. price of gasoline comparison. The 50% vs 25% doesn't mean too much in and of itself as gasoline is only one part of a barrel of oil. Also, the cost of gasoline production includes much more than just the raw input material cost.

For example, if the cost of oil represents 50% of the total cost of gasoline, then the numbers make sense. If gas started at $1.00 per gallon, $0.50 of that is crude oil cost, then a 50% reduction would bring the crude oil cost down to $0.25. The other $0.50 stays the same, reducing the total cost of the gasoline to $0.75. This would be a 25% reduction from the starting point of $1.00.

(This info is from one web site, but others corroborate it):

Found an interesting Department of Energy web site on this topic.

Interestingly, from 2000 to 2007, when the average price per gallon (PPG) was $1.91, crude oil represented 48% of the cost. In 2007, when the average PPG rose to $2.80, the cost of crude became 58%.

I'm right in between. For once. There was a point and time when gas was cheaper just about everywhere else this summer. Things have dropped quickly for us - a.k.a. aboutu 25-cents over the past two weeks, maybe a week and a half. I even just saw a 3.07 earlier - but I'm thinking I didn't clear all the sleep out of my eyes, so we may have dropped 7-cents MORE over night!

The 2nd part of your analysis is right, but this part is not, just to be pedantic. If pay $180 for a barrel of oil and use, say, 70% of that barrel to make gasoline, than I paid $126 for the portion of oil used for gasoline. If I then buy the next barrel at $90 and use the same amount of oil, then I've paid $63 for that portion of oil. That does indeed scale.

But you are correct that just because raw material costs drop doesn't mean overall production costs drop in proportion.

Alright Mr. Pedantic... :p

I actually rewrote the post and forgot to clarify that one line. It should have more correctly stated that "One cannot expect the cost of gasoline to drop the same percentage as the cost of oil as the raw material cost only represents a part of the cost of a gallon of gas."