Gulf oil costs about $60 a barrel to produce: "Deep Gulf drilling thrives 18 mos. after BP spill", Jonathan Fahey, Associated Press, via Yahoo Finance.
Oil is now about $100 a barrel. The drillers will expect at least $66 a barrel ($60 plus 10% profit), but then the resellers will expect over $72 a barrel. I don't know how many buyers and sellers there are before the oil gets to the refinery, each expecting to make some profit, but let's stop with the $72 a barrel price.
If gasoline is current selling for $3.299 a gallon in Duluth MN, then $72 a barrel oil might, just might lower the price of gasoline to $2.38 a gallon ($3.299 x $72/$100). But oil is a fungible product and will go to the highest bidder, no matter where it gets refined. Considering that the above article states that world-wide deep-well drilling, not just Gulf drilling, will at sometime account for nine percent of world production, I would find it surprising that gasoline would sell for less than $2.75 a gallon in Duluth when that level of production is reached.
Maybe Congress could mandate that all Gulf oil be refined and sold only in the U.S. But isn't that government regulation hampering the free market?
What will get gasoline prices lower is decreased world-wide consumption, and that ain't going to happen soon.
