Gasoline "prices at the pump" go up and down and oil "costs per barrel" go up and down, but they do so at different rates and even in opposite...

As the question says, "we want to think that demand and supply controls prices when the cost of crude oil is set by the same economic conditions that determine the price of gas." This would make intuitive sense because gasoline is derived from crude oil. Additionally, this is normally the case. The first graph shows "spot prices" for gasoline at New York Harbor from 1986 to 2016, and the second shows the same thing for...

As the question says, "we want to think that demand and supply controls prices when the cost of crude oil is set by the same economic conditions that determine the price of gas." This would make intuitive sense because gasoline is derived from crude oil. Additionally, this is normally the case. The first graph shows "spot prices" for gasoline at New York Harbor from 1986 to 2016, and the second shows the same thing for crude oil at Cushing, Oklahoma during the same period. Looking at the two graphs, we can see that they more or less track each other during some periods. For example, looking at 2008, we see that price of crude oil was 100 dollars a barrel. This coincided with the record price of gasoline in that same year, which reached a historic high. In fact, this is typical of a long-term trend in which the price of both crude oil and gasoline slowly rose over more than twenty years. Overall, this trend continued after the market turbulence of 2008, with crude and gas prices rising and then falling fairly significantly in the 2010s.

But the relationship between the two is never precise, and this is reflected in the graph to a limited extent. One economist has said that, although prices generally remain near each other, the prices of gasoline and crude oil "move in an elliptical orbit" around each other. In other words, although there is a relationship between the two, sometimes gasoline prices may not exactly respond to trends in crude oil prices in the short term. There are refining costs and other issues that might not affect crude oil prices, but they can cause the price of gasoline to rise as the supply falls. Gasoline cannot be stored in the long term, and it is very (demand) inelastic, meaning that the demand for it usually stays high no matter the price. Sometimes (including the last year or so in most of the United States) crude oil price drops do not equate to lower prices at the pump, even if the two do usually track each other over the long term.