Determining the price of gasoline and crude oil is a complex matter that takes into consideration several factors such as the oil grade, the location, source, destination, the supply and demand, potential major crises in oil-producing countries (higher threat of which could shoot up worldwide oil prices) and a lot of other global and national benchmarks.
The world oil price is the value of all the oil imported into the United States. Pricing markers or reference markers currently are the West Texas Intermediate (WTI) crude oil, which is superb quality crude oil that makes for excellent gasoline; Brent Blend, which is the major benchmark throughout Europe and Africa and which is also excellent though of lower quality than WTI; OPEC (or Organization of Petroleum Exporting Countries) Basket Price, which comes from countries such as Mexico, Dubai and Saudi Arabia – they are typically priced the lowest for their quality of crude oil is lowest, owing to high sulphur content, thereby making it least useful for making gasoline. These pricing markers are the ones to which other crude oil are priced against. For example, a country using WTI as pricing marker would refer to other oil prices as WTI minus $0.75.
Oil is marketed in commodities markets. These markets, such as the New York Mercantile Exchange (NYMEX), have experts negotiating for the prices of oil based on transactions and futures markets. Futures markets refer to how traders would agree upon a future price of a commodity, based on market trends standards, supply and demand, etc. The commodities futures work like this: buyers and sellers would agree upon a selling price to be honored at a specific date. Though this trading is usually based upon the external factors impacting the value of oil, this trading in itself could also be a determining factor on oil’s value. It can get very complicated but you can read more about this process at the Commodities Futures Trading Commission website, cftc.gov.
The market price of oil is a major determining factor in a country’s economy. Conversely, the economy is also a factor that determines oil prices. To illustrate, in January 1999 which was around the time of the Asian financial crisis, prices per barrel shot down to $16 as there was a negative downturn for demand. For major oil-producing companies, which derive most of their economic income from oil exports, low oil and fuel prices would mean a weaker economy. For example, as the world everywhere experiences recession (which means lower demands for oil) – in 2008 oil prices went down from $150 to $40 a barrel in a space of only 5 months – oil exporting countries such as Russia were the some of the countries that showed major economic downfall.
To keep updated on gasoline and crude oil prices today, you could visit such websites as bloomberg.com. Through this website, you can easily view prices per barrel or gallon of such commodities as petroleum, natural gas, and electricity. There are also charts and comparison tables that would let you see at a glance the rate of change of the previous versus current prices.
It’s great to want to stay up-to-date on current issues, and one of the most significant changes you would want to understand and look out for would be oil prices. After all, it does have a big impact on our normal, everyday lives, and it pays to be on the know regarding these matters.