How are the prices of oil set?

You have to ask, at what level? The price of crude oil bought from the producers is set by market forces, but the market is not a free market. A large part of it is controlled by OPEC, an association of oil-producing countries, who set production quotas (they limit supply).





The crude oil reaches the oil companies who change it into products that can be sold: gasoline, kerosene, diesel, heating oil, motor oil, plastic pellets, etc. The demand for each of these products change with the seasons and with changes in the economy, and the oil companies have to predict what the immediate future markets will be for each of their products. If they are wrong, or things change (like a warm winter), the products for that will not sell, and their prices will drop, and the companies will shift production to other products that sell for more.





Some of these companies take advantage of the fact that neither Congress nor the public have a clue about how the market works. It takes months for crude oil produced in, say, Venezuela to make it to the US and be processed into products for sale. So if the spot price for oil futures, which is what the newspapers report, goes up, it will have no effect on the oil already bought and being delivered to your local gas station. But the oil companies raise their prices immediately, thus making the record profits reported in the papers. The retail prices don't usually drop as fast as they went up, although you may recall the gasoline prices dropped pretty suddenly last year when the oil companies realized they were making an obscene profit with this gimmick and there might be political consequences.How are the prices of oil set?
way to ******* high drop down to 200 a gallon for superunleaded i can swing but 3.75 a gallon RRRIPP OOOOFFFFF%26gt; I HAVE TEN CARS TO FUEL EVERY DAYHow are the prices of oil set?
Through supply and demand although OPEC has a great deal of influence by attempting to coordinate production by its members. As it has 40% of the production and two thirds of the reserves, it has had a large influence at various times over the past thirty years. However, the level of demand for petroleum products and the price of alternatives has a substantial effect on oil prices as well. The three main oil markets are the New York Mercantile Exchange, the International Petroleum Exchange in London and the Singapore International Monetary Exchange.
supply and demand.
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