The oil companies and refiners buy or sell their oil at todays rate. If the market rate of oil is going up, they also raise the price of current inventories. Retailers and wholesalers do the same thing in all kinds of products. They have to pass along the increased costs in a timely manner to allow the downstream market to catch up. Its as simple as, Todd getting a shipment of spoons. Metals went up this summer and then began a decline after the olympics (china shut down their steel plants for cleaner air) If the spoons arrived and the price was higher, Todd would lose money and probably get irritated with his supplier for surprising him. But the fact that cost of the spoons went up, regardless of prior knowledge, Todd would or should also tell his customers, that a price increase is coming on their next order. He would also increase the price of current inventory as it ships out. The reason is, he is going to invest more money in his next purchase of raw materials. Its also a reason why companies dont carry a lot of inventory when prices go up dramatically for steel or lumber. When prices fall like they are for oil, gasoline inventories already purchased as a higher price, cannot be reduced because the gross profit margin will be affected. There are a few fuel suppliers who buy on the spot market, they are limited inventory, so as the price drops, they can stay competitive. Its almost impossible not to lose a little profit when prices are dropping.

Steel salvage yards were paying up to 500 per ton of good steel. If they sit on the new inventory , the price could go down and they would lose money on product they already bought. Right now good steel is worth less than 50 dollars a ton at the scrap yard.

Price differentiation between states as well as competitors is a function of volume purchasing, total overhead, competition in town, and buying power of the customer. We pay more in seatte-tacoma because along with property values, the customer has more money than folks in communities like Forks or yakima.