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  #11  
Old 02-15-2009, 02:42 PM
wvshooter wvshooter is offline
 
Join Date: Oct 2008
Location: WV
Posts: 33
Talking

Oil is a commodity and is priced the same way corn or beef or copper or any other commodity is priced. What throws people off is when the cost of crude goes up and the cost of gasoline goes down or vise versa. What really determines the price at the pump is what the market thinks is going to happen to the supply or demand of oil in the future. If the demand for oil is anticipated fall by 50% during the next four weeks then the price at the pump would plumet. If the demand was expected to go up by 50% during the next four weeks then the pump price would skyrocket. Neither of the changes in pump price would have anything to do with what the cost of putting the existing fuel in gas station's inventory had been. Aren't commodities markets beautiful.
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  #12  
Old 02-18-2009, 09:05 AM
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az_gila az_gila is offline
 
Join Date: Jan 2005
Location: 57AZ - NW Tucson area
Posts: 10,011
Question Prices easing?

This weeks wholesale quote dropped by 5 cents, at least it's a move in the correct direction...

Reference my previous post #5 in this thread...
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EAA Technical Counselor, Airframe Mechanic
Half completed RV-10 QB purchased
RV-6A N61GX - finally flying
Grumman Tiger N12GA - flying
La Cholla Airpark (57AZ) Tucson AZ

Last edited by az_gila : 02-18-2009 at 09:06 AM. Reason: added ref.
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  #13  
Old 02-18-2009, 09:46 AM
jspivey jspivey is offline
 
Join Date: Feb 2009
Location: College Station, TX
Posts: 1
Default How are fuel prices set?

For decades, the standard benchmark for oil prices has been West Texas Intermediate (WTI). Historically, WTI has been priced at a premium relative to other feedstocks, such as Brent crude or OPEC crude.

Right now, WTI is cheaper than Brent crude by $8/$10 per barrel.

Composition of the different varieties is different, so refineries set up for OPEC oil can't handle WTI & vice versa. Sorta like putting mogas, or maybe even diesel, in your IO-360 .

If your avgas supplier's refinery uses Brent or OPEC crude, the price of WTI will be almost irrelevant to the price you pay at the pump.

http://www.energyscoutconnections.co...l-really-worth

http://www.ogj.com/display_article/3...spread-widens/

John Spivey
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  #14  
Old 02-18-2009, 09:52 AM
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Mike S Mike S is online now
Senior Curmudgeon
 
Join Date: Sep 2005
Location: Dayton Airpark, NV A34
Posts: 15,420
Default Welcome to VAF!!!!

Hey John, welcome to the good ship VAF

Slide rule collecting??????? interesting hobby, but you need to start flying

Good to have another petro guy on here to help us get our facts straight.

Good to have you aboard.
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VAF 909

Rv-10, N210LM.

Flying as of 12/4/2010

Phase 1 done, 2/4/2011

Sold after 240+ wonderful hours of flight.

"Flying the airplane is more important than radioing your plight to a person on the ground incapable of understanding or doing anything about it."
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  #15  
Old 02-18-2009, 07:10 PM
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AlexPeterson AlexPeterson is offline
 
Join Date: Sep 2005
Location: Maple Grove, MN
Posts: 2,334
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Quote:
Originally Posted by LarryT View Post
snip

Changing the rules to only permit companies that actually could take delivery would eliminate much of the speculation that de-stabilizes prices. The original purpose of futures contracts was to ensure that users had an uninterupted supply, not to enable speculators to make money on paper.

Destabilized energy prices have terrible effects on business; utilities can't make an informed decision re how to fuel power plants and auto company product planners can't determine what their product mix should be, for example.
Keep in mind that more speculators lost money in the past year on oil than gained, since it is well below the price of a year ago. The effect last year's speculation had was to wake up some Americans (specifically, the president and Congress) to the coming production shortage. Their reaction was to end the off shore drilling ban. Prices started their free fall precisely after that.

It should be noted that this ban will be reinstated shortly, so expect prices to again soar.
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