I'm looking forward to rarely using any gasoline in a few months.
WTI is basically oil in and around Tx and Ok. Brent is quoted frequently but that's basically northern Europe and East Coast. Many refineries are designed to run Canadian crudes or South American/Mexican heavy crudes. They can all run a mixture but their economics usually favor a certain mix of properties related to certain types of crudes. All of these crudes are priced differently so there's a constant economic optimization going on. Sometimes some crudes get really cheap but only a few refineries may be able to take advantage of it.What I found interesting is that most of our gasoline is refined from overseas oil, not West Texas crude, and that this overseas oil is trading at prices some $10 a barrel higher than WTI. Evidently, we don't have the pipeline system to get the WTI to refineries nationwide, so these refineries have to use the currently more expensive overseas oil. The article goes on to say that those pipelines were never built because the overseas oil (of an inferior grade) has historically been cheaper than WTI.
I think this also explains why we are seeing a larger contango in the WTI futures than in the Brent futures.
What happens in a few months? I thought you already had that plug-in mod done to your Prius?
-ERD50
... lets see oil at 140 barrel, gas at about 4 bucks, now oil at about 40 gas just paid 1.91, something is fishey, getting screwed somehow.
Old Mike
Don't worry yet about $4 gasoline. If high profit margins persist, refiners will ratchet up production, Day says. Kloza says gas prices likely will head toward $2.50 a gallon through March. But they'll soon stabilize and drift down again, Flynn says.