Blegging again: On Singapore refined oil …
Thank you for the excellent responses to my previous bleg on refined oil prices.
Sadly I am in need of a little more help 🙂
According to the data series kindly provided by John Macilree the price of refined fuel has jumped pretty sharply, even as crude prices have stayed low. I am wondering if anyone knows why this has happened.
I have five potential theories:
- A cost shock to refineries around the world,
- World demand for oil has recovered increasing demand for the refined product – however, there has been stocks of crude oil (implying that it won’t show up in the crude price until later),
- Recent price movements have given refiners a view of the elasticity of demand – and they have discovered that the profit maximising price is actually higher,
- Refiners have fallen into a position where it is easier for them to tacitly collude,
- Prices had fallen “too sharply” as crude fell, and the recent steep increase is a correction to equilibrium.
On the price of petrol you may want to check this out: Why are gasoline prices so high? (February 2009 version).
Hi Paul,
Thanks for the link – I had noticed that the Brent crude oil price was remaining relatively high. Even so – dated brent crude is under $40 a barrel.
Although construction may also be playing a role (I would put that down as a cost shock) the fact is that global petrol prices are as high as they were in late-October/early-November even though crude (even measured by dated brent) is at least down 40%.
When I try fitting it to different ARIMA specifications (using only data to 2000 to fit my coefficients) the last couple of month seem a touch out of place. Hence why I’m trying to fish out a bit of information.
I’m currently thinking that prices should come back in a couple of months time – even if crude prices don’t change (which is consistent with the article you linked to). But if there are other “structural” factors sitting around here I would be very interested in them 😉
You might also want to have a look at: http://omrpublic.iea.org/
Thanks John,
Its a good site – but it doesn’t quite give me the “why” behind what is going on. It is true that volumes are falling – but the specific reasons for the shift are not clear.