Originally Posted by
word302
Fear monger? It's easily verifiable. Yes the largest players own their own wells but they still buy barrels on the market. That still isn't even considering the hit everyone is taking to reserves.
You don’t understand oil. The index set the price per gallon for demand.
Exxon can own an oil well and have a production cost of <$30 a barrel. They’re not just gonna sell gas for .50 cents a gallon when the index’s set the going rate.
It’s works the other way too, a boutique refinery pays $150 a barrel, they can’t just charge $8 bucks a gallon because they paid for a supply chain disruption.
The oil “majors” still have supper cheap production cost and can’t just shutdown production to raise the prices to $8, when it kills demand.
Tons of major refinery’s buy open market oil, it’s usually distressed shipments from a maintenance problem at the planned refinery.
The oil index’s speculate global demand with supply, they don’t speculate who will pay above sticker price due to a supply chain problem.