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Thursday, March 8, 2012

Finally, The Final Answer on Why Oil Costs What It Costs -- The Answer Comes From a Non-Oil Producing State

Tennessee provides the answer

Link here to PennEnergy and Chattanooga Times Free Press.
Global trade in crude oil is dominated by futures markets, wherein users such as refineries lock up supplies today at a fixed price for delivery at some time in the future. Supplies have traditionally been considered fungible, meaning that the source was essentially immaterial, and that oil from one supplier traded at the same price as oil of equal quality from anyone else.

A fascinating disparity has developed recently, resulting in widely divergent prices for crude oil futures depending upon geography.

Customers are currently paying substantially different prices depending upon where they are located. This imbalance reflects the rapidly changing dynamics of North American oil production and the resultant transportation bottlenecks impeding the efficient distribution of supplies.
For more insightful comments, go to the linked article.  

Or for the real answer, just read the Democratic leaders explanation: not enough regulators.

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