[grampybone]

I have a question To the more knowledgeable on the forum.

What is the price ratio of a gallon of gas to a rise of a dollar a barrel of crude? $138 a barrel should be roughly how much a gallon of gas? (barring state and federal gas taxes of course). Every dollar per barrel rise is how many cents per gallon in gas?

And how soon does the price increase happen?

If this has been discussed before my apologies.

---->merged by Wisconsin_Cur<-------------

[Subjectivist]

Prices used to be somewhat predictable, when oil was $28.00 a barrel gasoline in Ohio was $1.90 ish. These days WTI oil is $102.00 so if prices were a fixed ratio gasoline would be $6.90.

I certainly prefer he current $3.60 I am paying to the $6.90 but of course the $1.90 would be a lot more to my liking.

So why is gas so far from where a simple model would put it?

[ROCKMAN]

gampy – the exact answer can get very complicated fast. A $138/bbl oil could produce a wide range of gasoline yield volume. And most of that bbl of oil might not be turned into gasoline but other products such as diesel etc. And then there the costs to get that gallon of oil to the refinery. Today we are shipping at least 50,000 bbls of Eagle Ford half way around the country to eastern Canadian refineries then just a few miles down the road to Texas refineries because those C refineries can produce more high value products then the Texas refineries. So much so it’s worth the expense of shipping it. And that doesn’t mean they make more gasoline from the EFS oil.

You also need to understand where a lot of our gasoline comes from: the EU. And we, in turn, ship a lot of diesel produced here to the EU. And all for the obvious reason: each region depends primarily on a different motor fuel. And to make it even more complicated the vast majority of oil in the world doesn’t sell for the price you see thrown out daily. The WTI benchmark is just that…a benchmark and not a sales price. Adjusted for yield, transportation and refinery availability my WTI might sell for WTI + $4.50 per bbl or WTI - $3.75per bbl. And then one more complication: market variations. Forget about Houston vs. L.A. In Houston gasoline could sell for $2.95/gal at the Shell where I live and $3.22/gal across the street from my office at that Shell station. And that station selling for $2.95 when WTI is posted at $94/bbl might be selling it for $0.10/gal more next month when WTI is posting at $2/bbl less.

There is no easy/obvious conversion for $/bbl of oil to $/gal gasoline.

[Tanada]

But Rockman, any easy conversion factor would be SO much more convenient than reality!

It does seem bizarre if you think about it that oil spot price is not a sound indicator of gasoline price, you can't get to Gasoline without an input comity after all. How much extra Butane were they able to blend into gasoline in the northern tier states because of the arctic cold this winter? That should have driven the price down somewhat.

[ROCKMAN]

T - Driving home yesterday a radio report reminded me of another variable. When the fed mandated change over to the summer blend in a couple of months happens it will add about $0.06/gal. Not huge but that would still be the equivalent of oil price going up about $2.50/bbl.

[Subjectivist]

$this->bbcode_second_pass_quote('ROCKMAN', 'T') - Driving home yesterday a radio report reminded me of another variable. When the fed mandated change over to the summer blend in a couple of months happens it will add about $0.06/gal. Not huge but that would still be the equivalent of oil price going up about $2.50/bbl.