Crude Oil and Gasoline: The Illusion of Equality

The time has come to once and for all put to rest the notion that crude oil and gasoline are joined at the hip as commodities in solidarity.

Yes, there’s a thin veil of truth to the myth, born of the fact that the latter is refined from the former. But for all practical purposes, it’s prudent to consider each separately from the other. The reason: each is driven by a separate, and at times dissimilar, set of supply and demand factors.


Still, the two appear to share a commonality in pricing trend at times, promoting the illusion of equality. But as the news from Iran reminds, the danger in the conceit carries more than a little risk for clear thinking on energy matters.

The casual observer may wonder why Iran, home to 10% of the world’s proven oil reserves, and second in global crude production, has started rationing gasoline, which has sparked riots and unrest in the country. In fact, there’s no great mystery here.

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