Publications: The Petroleum Economics Monthly

Product Markets: The Key Determinant of Crude Prices (July 2012)


This Petroleum Economics Monthly returns to a familiar subject: the impact of structural change on petroleum prices. The report, now in its twenty-ninth year, has examined the issue many times. In fact, we published our first writing on the topic, “The Evolution of Oil as a Commodity,” more than thirty years ago and have returned to it many times since.


Here we focus on the role played by relatively modest-sized distribution firms on the US East Coast, firms that supply consumers there with gasoline and diesel fuel. Our goal is to show how their inventory management practices affect the gasoline and diesel forward price curves. The prices of these products, in turn, determine the price of Brent, the world market’s benchmark crude.


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