Nothing has become commercially more important to us that the prices of crude oil. Rise in prices of crude oil always creates havoc in our daily budgets. First one to hit is the running cost of our automobiles (Which means skipping that favourite weekend long drives for many), and then rest everything follows. Fruits, vegetables, our daily groceries, and air travel almost everything goes up except of income. Interesting due to this spiral rise in prices our real income actually diminishes as we are able to buy less commodities in same amount of price. That's the impact of crude prices in our daily lives. For a change this time around prices of crude are looking to settle down are under $100 level but a reverse phenomena is witnessed, in spite of crude going down the gasoline (which is the prime fuel for running automobiles and a direct derivative of crude) prices are still moving upwards. Let us study this factor more in detail.
You don't have to be a mathematical genius to establish positive correlation between the international crude prices and gasoline prices. Movement the international crude prices go up so does the gasoline prices. But this time around a strange thing is happening, when the consumers were happy to see the crude oil prices come down and anticipating gasoline to follow, it actually didn't happen. On the other hand it seems to still continue its climb. Why is that happening?
No, it is not God's wish to deprive you of your long weekend drive or make your lives more miserable, answer to this lies in current economic conditions surrounding the crude and gasoline supplies. The refineries are not producing enough gasoline because of two major reasons:
Not enough Crude Stocks: No so long ago the price of crude was in rage of $130/barrel and much anticipated to cool down. Many refineries and other commercial and non-commercial establishment deferred their imports thinking that crude prices are due to fall down and they could be at the back foot if they decide to buy on higher levels. This led to shortage of crude in the refineries (which further refine it to gasoline).
Many refineries went on a shut down: Many of the refineries even if they had enough stocks were shut down due to maintenance or flooding on the west coast which further aggravated the supply conditions.
There not enough gasoline to meet the current demand and is leading cause of gasoline prices going up in spite international crude prices have come down. We should soon get over the unique situation and shortly see gasoline following the direction of crude.
The Author has more than 10 years of International Market Development and Advisory experience, focused on new deals, company image and productive partnerships. Track record of contributing in start-up business units and divisions with developing accounts and organizing sales and marketing campaigns in different global markets. Click to know more about Crude Oil and Crude Oil Trading
No comments:
Post a Comment