Refiners - a factor in the price of fuel.
We've all watched the price of fuel drop slowly when there's a glut of crude oil and then watch the price of fuel jump overnight when the price of crude goes up. This is old news. Something I've b...
Forum Discussion
Gasoline and diesel have their own market price, differentiated from the price of crude oil. A lot of those price structures revolve around the amount of storage capacity for those fuels that is available. Yes, fuel prices are effected by the price of crude but less so than in days past.
The petroleum market, how it is perceived, how it is effected, and how it is controlled are mysteries to nearly everyone. It is different than other commodity markets in that supply and demand are not the only things that effect the price. Speculation and owner control have more impact on price than other marketable commodities.
At least more folks are starting to sense the "smoke and mirrors" techniques used by big oil and that all bodes well for the consumer. You can only have so many publicized refinery mishaps and then folks start to see the truth. The bad thing is that the media is clueless and will use the American Petroleum Institute for facts and figures.
Two interesting stories:
First. In 1974-75 I was employed on petrochemical tankers. I have a Merchant Mariners card with various endorsements. One of my workmates has a brother that works in the same capacity but for a different company, Royal Dutch/Shell. At that time his run was from the Red Sea ports to Rotterdam, from Rotterdam to Newark, and back to the Red Sea to continue. Crude is carried form the Arabians to Rotterdam and the ship is then filled with gasoline to deliver in Newark. Remember this is during the time when US consumers were lined up at the pumps to buy gas at inflated prices and shortages are blamed on OPEC. The RD/Shell tanker, fully laden, two days out from Newark was ordered to empty tanks and return to the Red Sea, there was no storage open in Newark to take the gas. That is just what they did, removed the tanker's pipe blanks and discharged the whole cargo in the Atlantic.
Second. In 1990-92 I was employed at the Port of St Paul, MN for the only midstream fueling service at that location on the Mississippi. I pumped about 4 million gallons/year to tow boats needing fuel. In 1991 on the day that the US intervened in Kuwait, I read my daily NYMEX consultant wire release that said Big Oil had met to raise the price of diesel by $.05 but that the pending US intervention would push the price considerably higher. I advised the General Manager of our company that we should order and store as much fuel as possible, that morning. He deferred to wait and see what the market would do. By the time he realized I was right, the refinery had chained their gates shut and no orders were moved. The next day, the price of fuel had nearly doubled.
I think these two anecdotes say more about the underlying mechanisms of fuel pricing than anything you see or read from the media. The media is the same one that would have everyone believe that the US is dependent on foreign oil and that has never been true.
The petroleum market, how it is perceived, how it is effected, and how it is controlled are mysteries to nearly everyone. It is different than other commodity markets in that supply and demand are not the only things that effect the price. Speculation and owner control have more impact on price than other marketable commodities.
At least more folks are starting to sense the "smoke and mirrors" techniques used by big oil and that all bodes well for the consumer. You can only have so many publicized refinery mishaps and then folks start to see the truth. The bad thing is that the media is clueless and will use the American Petroleum Institute for facts and figures.
Two interesting stories:
First. In 1974-75 I was employed on petrochemical tankers. I have a Merchant Mariners card with various endorsements. One of my workmates has a brother that works in the same capacity but for a different company, Royal Dutch/Shell. At that time his run was from the Red Sea ports to Rotterdam, from Rotterdam to Newark, and back to the Red Sea to continue. Crude is carried form the Arabians to Rotterdam and the ship is then filled with gasoline to deliver in Newark. Remember this is during the time when US consumers were lined up at the pumps to buy gas at inflated prices and shortages are blamed on OPEC. The RD/Shell tanker, fully laden, two days out from Newark was ordered to empty tanks and return to the Red Sea, there was no storage open in Newark to take the gas. That is just what they did, removed the tanker's pipe blanks and discharged the whole cargo in the Atlantic.
Second. In 1990-92 I was employed at the Port of St Paul, MN for the only midstream fueling service at that location on the Mississippi. I pumped about 4 million gallons/year to tow boats needing fuel. In 1991 on the day that the US intervened in Kuwait, I read my daily NYMEX consultant wire release that said Big Oil had met to raise the price of diesel by $.05 but that the pending US intervention would push the price considerably higher. I advised the General Manager of our company that we should order and store as much fuel as possible, that morning. He deferred to wait and see what the market would do. By the time he realized I was right, the refinery had chained their gates shut and no orders were moved. The next day, the price of fuel had nearly doubled.
I think these two anecdotes say more about the underlying mechanisms of fuel pricing than anything you see or read from the media. The media is the same one that would have everyone believe that the US is dependent on foreign oil and that has never been true.
