Price of oil falls - why are gas prices so high?

With gas prices up by more than a dollar per gallon from a year ago, many holiday weekend travelers will be skimping on their vacations. Terry McCarthy reports on the new rules of the road.

ATLANTA - Oil has been falling recently - and gas prices, too. But not nearly as rapidly.

The price of oil closed Monday at about $84 a barrel. That's up nearly $2 from Friday. Gasoline is down two cents in the past week to a nationwide average of $3.58 a gallon.

Odetta Muhammad's a single mom, a registered nurse and a frustrated commuter. CBS News transportation correspondent Mark Strassmann reports she spends $80 a week driving 70 miles a day.

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Between oil companies and convenience stores, Muhammad doesn't think she's getting the best possible deal.

"No of course not," she said. "Don't quite understand the phenomenon when the gas prices in barrels is going down and yet the gas prices are still going up. Sounds like a profit type margin, gas race."

Often the price of crude oil and gasoline rise together. But gasoline usually lags behind crude as prices fall. The price of U.S.-produced crude oil has dropped 30 percent since May. But gas prices have only fallen 11 percent.

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Compare that to 2008, when oil prices fell 77 percent and gasoline dropped 61 percent.

"As gas prices rise, as increases happen, stores are more apt to maybe absorb some of those price increases during a rise," said AAA's Avery Ash. "Then, as prices fall, they may be inclined to lag a little to make up for some of these losses."

Another important factor is the higher price of imported oil. Half of the oil America now uses is the more expensive crude produced overseas.

Muhammad says she feels that every day, "along with everybody else."

It could be a while until there's relief. Gas prices should drop another 40 cents by Christmas.

  • Mark Strassmann

    Mark Strassmann has been a CBS News correspondent since January 2001 and is based in the Atlanta bureau.