[AT] Gasoline $

[Mike Sloane]

A further point of clarification about oil prices: Most of the US oil 
companies have either their own wells or ones that they have contracted 
for at fixed prices. When the domestic supply isn't enough, they get oil 
from outside the US - the middle east, the north sea, southeast Asia, 
Russia and its neighbors, Nigeria, Venezuela, Mexico, etc. most of those 
sources they either own or have long term contracts for at fixed prices. 
Any shortfall in those sources is made up on the "spot" market - an 
unregulated international commodities market. And it is the spot market 
where the $66+/barrel price comes from. Most of the oil they acquire 
cost much, much less than that. And the oil they acquire from outside 
the country takes anywhere from two weeks to 2 months to get to the 
refinery, depending on how long it takes for the tankers to make the 
trip. So today's price on the spot market has little to do with the 
production cost of the gasoline delivered today to your local service 
station. Unfortunately, you won't read or hear that in the media reports.

Mike

Dudley Rupert wrote:
> Mike,
> 
> Thanks for pointing out what you did.  You are right ... the barrel size in
> gallons is 42 not 33.  I don't know what I was thinking last night.  And, of
> course, my observation that a gallon of crude is approaching two dollars is
> wrong as it should have been more like a dollar and a half.  But I think the
> point is still valid and that is if crude prices go up wildly then we've got
> to expect that pump prices will do the same.
> 
> Dudley
> Snohomish, Washington
> 
> 

-- 
Mike Sloane
Allamuchy NJ
mikesloane at verizon.net
Website: <www.geocities.com/mikesloane>
Images: <www.fotki.com/mikesloane>

You can tell whether a man is clever by his answers. You can tell 
whether a man is wise by his questions.
-Naguib Mahfouz, writer (1911- )


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