Oil Crisis Explained in 3 Minutes
blog.nvestly.com
Oil Crisis Explained in 3 Minutes
1–10 of 33 posts
Re: Oil Crisis Explained in 3 Minutes
#2Knowing absolutely nothing about oil and the industry, I don't view paying $3 a gallon now vs $4.29 a couple months ago as a "crisis."
Re: Oil Crisis Explained in 3 Minutes
#3Knowing absolutely nothing about oil and the industry, I don't view paying $3 a gallon now vs $4.29 a couple months ago as a "crisis."
Enjoying deflation is un-American! I don't get it either.
Re: Oil Crisis Explained in 3 Minutes
#4Knowing absolutely nothing about oil and the industry, I don't view paying $3 a gallon now vs $4.29 a couple months ago as a "crisis."
I live in an oil rich province and many of my friends are worried about their jobs.
Re: Oil Crisis Explained in 3 Minutes
#5Something I do not understand:
- barrel price went from $100 to $60. That's $40 drop.
- Price went from $3.60 to $2.80 a gallon in my city. That's $0.80 only
I don't get it.
Re: Oil Crisis Explained in 3 Minutes
#6Time for some shale driller bailout planning. If it breaks OPEC it's good for everyone. The unholy amount of funding that supports global terrorism will take a big hit.
Re: Oil Crisis Explained in 3 Minutes
#7Something I do not understand: - barrel price went from $100 to $60. That's $40 drop. - Price went from $3.60 to $2.80 a gallon in my city. That's $0.80 only I don't get it.
Not all of the price of gasoline is derived from the price of crude oil. Some of the price is from taxes, transportation and refinery costs which have not changed. (The exact ratios vary depending on where you live).
Re: Oil Crisis Explained in 3 Minutes
#8Something I do not understand: - barrel price went from $100 to $60. That's $40 drop. - Price went from $3.60 to $2.80 a gallon in my city. That's $0.80 only I don't get it.
$100 to $60 is a 40% drop in the price of oil.
The price of gas is only partially due to the cost of oil. Taxes make up a pretty chunk of the cost of gas. On average $0.50/gal.[1]. Don't forget the cost of refining and transportation. This chart says 62% of the cost of gallon is due to crude oil costs[2]
So based on your $3.60/gal, $2.23/gal is oil. Reduce that by 40%, you get $1.33 and add back in the other stuff and I get $2.70/gal now.
Not far off huh?
[1]http://en.wikipedia.org/wiki/Fuel_taxes_in_the_United_States [2] http://www.eia.gov/petroleum/gasdiesel/
Re: Oil Crisis Explained in 3 Minutes
#9Something I do not understand: - barrel price went from $100 to $60. That's $40 drop. - Price went from $3.60 to $2.80 a gallon in my city. That's $0.80 only I don't get it.
http://www.investopedia.com/articles/economics/08/gas-prices...
The cost of the raw crude oil is only part (but a significant part) of the pump price.
It's more 'fun' in the UK where fuel duty and other taxes (VAT) form the majority of the pump price:-
Re: Oil Crisis Explained in 3 Minutes
#10Something I do not understand: - barrel price went from $100 to $60. That's $40 drop. - Price went from $3.60 to $2.80 a gallon in my city. That's $0.80 only I don't get it.
Great point. 40% drop in oil prices vs. a 22% drop in gas prices. Bottom line is that gas distributors don't have to precisely reflect the drop in oil prices at the pump because they can make more money that way.
There's also the fact that the oil prices generally reflect future prices. Gas stations need the physically delivered commodity. There's some small fluctuations there.
I don't have a deep understanding of how gas stations work, if anyone else has insights would love to hear them.