What are the drivers of oil price?
- Thread starter trade4succes
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This is a seminal work. I require all my junior colleagues read it.
Gasoline price movements in any given country -- it's up 22% from last year or down 8% in the last two months relate to crude pricing. But the levels the prices are at -- call it the base -- have nothing to do with the pice per barrel of crude.
Like cigarettes, booze etc. the base depends on governments attitude toward the commodity. My partner and I owned some "stripper" production in Texas during the '70s and I think we got $12.40 a barrel while others in Texas got much less. Because our wells each produced an average of less than 10 barrels daily the Texas Railroad Commision let us get a market price.
Our total production averaged 50 barrels a day over 8 wells in two counties. Why we got to sell at the market and others that had wells producing 100 barrels per got less -- the regulated price of less than $8 per -- never made any sense to me. Without the revenue from gasoline many countries would be bankrupt in a month. The whole setup is insane.
Like cigarettes, booze etc. the base depends on governments attitude toward the commodity. My partner and I owned some "stripper" production in Texas during the '70s and I think we got $12.40 a barrel while others in Texas got much less. Because our wells each produced an average of less than 10 barrels daily the Texas Railroad Commision let us get a market price.
Our total production averaged 50 barrels a day over 8 wells in two counties. Why we got to sell at the market and others that had wells producing 100 barrels per got less -- the regulated price of less than $8 per -- never made any sense to me. Without the revenue from gasoline many countries would be bankrupt in a month. The whole setup is insane.
Thanks for the recommendations for "Oil 101."
I would add "The Prize" by Yergin if someone is starting out or just wants a fuller understanding of oil's history and importance. Some say that Yergin is now just a shill for his Big Oil clients, but back in the day, he wrote a darn good book and it won a Pulitzer to boot.
http://en.wikipedia.org/wiki/The_Prize:_The_Epic_Quest_for_Oil,_Money,_and_Power
I would add "The Prize" by Yergin if someone is starting out or just wants a fuller understanding of oil's history and importance. Some say that Yergin is now just a shill for his Big Oil clients, but back in the day, he wrote a darn good book and it won a Pulitzer to boot.
http://en.wikipedia.org/wiki/The_Prize:_The_Epic_Quest_for_Oil,_Money,_and_Power
cool... I didnt know the PBS documentary was based on it...
http://www.youtube.com/watch?v=Qspu35JG59Q