Crude Oil Spot Price
Crude Oil Spot Price
For perhaps the first time ever you and other people are concerned with the crude oil spot price. Of course, over time there have always been people who are interested in the crude oil spot price. But, outside of the oil industry many people never considered the price of oil. They simply used the gasoline that they needed and didn’t give it a second thought. 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 the crude oil spot price. A lot of people don’t understand what factors into the price of oil and why it affects the price of gasoline.
Most people believe that because oil is a natural resource that the crude oil spot price 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. So, what exactly goes into determining the crude oil spot price? Probably more than you think!
To start with, the crude oil has to be extracted from the ground which is a laborious 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 product.
The crude oil spot price makes a lot more sense when you consider all of these things and don’t just assume that it is a simple process. The price of oil changes each day based on investments, drilling, weather conditions, supplies, and more. 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, when you have some understanding as to what creates the cost the pain at the pump is slightly more tolerable.