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To: thackney

The math is not that simple because a lot of oil companies have long term contracts that still have years until they expire. They also have their own production. Thus, their weighted average cost per barrel is far below the often quoted spot price.


24 posted on 06/26/2008 5:58:04 AM PDT by theBuckwheat
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To: theBuckwheat
At the same time, the long term contracts they have been making for the past year are locking in some pretty high prices.

But I don't think you realize how much is actually paid. The average isn't the spot market price, but take a look at what is actually paid.

Refiner Acquisition Cost of Crude Oil
http://tonto.eia.doe.gov/dnav/pet/pet_pri_rac2_dcu_nus_m.htm

In April, the average price for a domestic barrel of Crude Oil bought by refineries was $107.50. The average spot market price for West Texas Intermediate (the futures price quoted when people talk about the price of "oil") was $112.58 for the same month.

Petroleum Spot Prices
http://tonto.eia.doe.gov/dnav/pet/pet_pri_spt_s1_m.htm


Of course, oil comes in all kinds of quality grades and the actual price reflects that. It has different values and either produces lower grades of products or takes additional refining to produce the same amount of products as something like WTI.

Domestic Crude Oil First Purchase Prices by API Gravity
http://tonto.eia.doe.gov/dnav/pet/pet_pri_dfp3_k_m.htm

Landed Costs of Imported Crude by API Gravity
http://tonto.eia.doe.gov/dnav/pet/pet_pri_land3_k_m.htm

41 posted on 06/26/2008 6:59:35 AM PDT by thackney (life is fragile, handle with prayer)
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