Subscribe to usCrude Oil Is A Truly Global Market
Published Date: 2008-06-25 17:04:58 WorkOnInternet.com


Read More on Investment & Financial StrategyCrude oil is no exception. Technological advances in seismic exploration have dramatically reduced the cost of finding new reserves, thus increasing oil reserves greatly. Crude oil is a mixture of different chemical called hydrocarbons. The boiling oil turns into a mixture of gases in the column. Crude Oil is a complex mixture consisting of up to 200 or more different organic compounds, mostly hydrocarbons. Different crudes contain different combinations and concentrations of these various compounds.

Crude oil is produced in Alaska, moves south on TAPS and then moves by tank ship to the West Coast. From the tank ship, the crude again moves by pipeline to refineries along the west coast of the U.S. Crude oil is discovered following lengthy scientific studies to determine the possible presence of underground deposits of petroleum (oil and related liquids). Contrary to popular belief, oil is trapped in the tiny pores of underground rock ? Crude oil is found in many parts of the world. Crude oil can be transported economically long distances overland by pipeline and overseas in very large tanker vessels.

Crude oil is useless unless it is refined into the products we really need — gasoline, heating oil and jet fuel. Crude oil is the world's most actively traded commodity. Over the past decade, the NYMEX Division light, sweet (low-sulfur) crude oil futures contract has become the world's most liquid forum for crude oil trading, as well as the world's largest-volume futures contract trading on a physical commodity. Crude oil is the good that I most often use to explain this principle, which is clear in the following chart.

And as supply is stretched nearly to capacity, new sources of demand from rapidly developing China and India pull the strings even tighter. Crude oil is a global commodity and it is transportable anywhere in the world. Consumption by emerging economies like India and China, each with huge populations and improving standards of living, is growing rapidly and global demand for crude oil is outpacing supply. Crude oil is not the solution to our problems. It is like the bitter bile on the liver.

Gasoline and diesel are sold through a network of Tesoro-branded retail self-service stations on Oahu, Maui and the Big Island. Gasoline was burned off, and bitumen and asphalt (the heavier parts of crude oil) were discarded. But gradually rising in importance were the incandescent light and the internal combustion engine.

Prices for WTI are quoted at Cushing, Oklahoma, which is a major crude oil shipment point that has extensive pipeline connections to oil producing areas and Southwest and Gulf Coast-based refining centers. Prices of precious metals futures fell sharply yesterday, giving back most of the previous day's gains. Crude oil prices seesawed in nervous trading before finishing slightly lower on the New York Mercantile Exchange.

Higher cost translates into higher prices. Inflation is rearing its ugly head, even as economies slow down. Higher interest rates bring actual output in line with (the lower) potential output. If it were less worried about inflation, could the Fed offset the adverse effect of oil price increases on economic activity?

Article by Christopher West

http://whoischriswest.com

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