We all watch the price of gasoline at the pump when we need to fill up, right? But when you get to thinking about it, thousands of other things are a by-product of oil. I have noticed when the price of oil goes down, in a couple of days the price of gasoline will generally go down some. But have you ever seen the price of the quart of oil for your car go down or the price of any of the other thousands of oil related products go down in price because of a drop in the price of oil that's in those products? No, I didn't think so. Is that called price gouging? Should this savings be passed on to the consumer? Are consumers being ripped off at the stores that sell these other products that contain petroleum? We don't complain about these stores ripping us off, but we complain if a gas station doesn't lower their prices.
This is an interesting thought but there are possible underlying reasons for not dropping prices on some by-products. Among some of these by-products are lubricants (motor oils, etc.), wax (paraffin), tar (for roofing), and asphalt (for road building). The one that comes to mind which effects many of us is jet fuel and diesel. The price of air travel and commodities in stores (which carrry a hidden transportation cost) rarely sees price decreases. The possible reasons for this could be that long term contracts are in place whereas the prices are set for months, maybe years in regards to fuel prices and commodities. This is my opinion of what might be occurring.
Charles, I agree, the effect on motor fuels is much faster and more direct than the other products you mentioned. Take plastics for instance, a plastic product is not produced by just refining crude oil. It is a much more complex process that involves other raw materials just to produce the the resin that is enventually melted and molded into thousands of products. I think you will see flucuations in motor oil but at a much slower rate than gasoline. The quart of 10W/30 on the shelf has gone through a much more involved and time consuming packaging and distribution process than the unleaded gas in your tank. Plus the long term contracts you mentioned, Walmart could have purchased a million cases of motor oil at 2009 prices.
The "turnover" of a gallon of gasoline is very quick. At least the turnover of inventory in grocery stores, about once every three days. Therefore, the raw product price has a quicker and more direct effect on pump price.
The rest of the products made from petroleum, which is the other half of a bbl of oil, has a longer time to market, a longer turnover rate and a longer time to manufacture, on the average. All of this contributes to dollar cost averaging of the raw product price in the finished product.
Concerning for example, raw vegetables, which part of the cost of production includes petroleum products to plant, fertilize, harvest and package, the largest cost is the marketing cost, or middleman markup.
If you are raising milk cows, the cost to raise stays pretty much the same, unless you have to buy a lot of hay one season (I guess), but the price of milk is way high. Higher than gasoline.
I suppose this is all one of philosophy. My son-in-law, who is pretty bright amongst most things really believes that the college Football games in Texas ought to be free since the State owns the college and he is a Texas resident and that he is being gouged by having to pay for a football ticket. But he is a real geek who understands nothing about micro or macro economic theory. The good news is that I have free in home tech support.