Crude Oil Spot Prices:  Understanding the Dollar Amount  

If you are just beginning to look at crude oil spot prices you are like a lot of people.  For a long time we took crude oil spot prices for granted but with gasoline prices rising and falling many people are interested in what is causing the changes or where the high costs associated with fuel are coming from. With gas prices climbing higher and higher all the time and costing more than a lot of people can afford, more average people are taking note of crude oil spot prices.  A lot of people don’t understand what factors into the price of oil and why it affects the price of gasoline.  Looking at crude oil spot prices helps to explain the costs that we are all gaped mouth at. 

If you are like a lot of people you believe that because oil is a natural resource that crude oil spot prices shouldn’t be any different than it was a year or five years ago.  The fact of the matter is that the drilling of oil can hardly keep up with consumption, which is driving prices higher and higher. Wondering what affects crude oil spot prices?  Quite a bit actually! 

Crude oil spot prices start with the extraction of the oil from the earth, which is not an easy process. This costs money but this is not where the cost of oil stops.  Once the oil is extracted from the earth it has to be delivered to a major shipping location which also costs money.  From here, the oil is shipped to a refinery, which again, costs money.  Lastly, it is turned into different types of fuel such as gasoline, heating oil, jet fuel, and more.   

But it doesn’t stop here; instead the refiner ships the products to the wholesales suppliers who then spend more money shipping the oil that has been turned into gasoline to retailers such as gas stations.  Every one of these locations and practices is a business and everyone wants to make money, so the cost is handed down time and time again until it reaches the consumer who needs the fuel.` 

The price of oil changes each day based on investments, drilling, weather conditions, supplies, and the list goes on, so the crude oil spot prices are always fluctuating.  The increase in price is what has caused an increase in gasoline prices that have had many consumers up in arms about the cost of filling their gas tank.  While dealing with the cost of the crude oil is never pleasant, having an understanding of where the prices come from does help.