Gas prices have been outgunning oil prices for a little while now. Yes, there have been some ups and downs in this area, and some tinkering with the numbers to get it a little closer to “where it should be.” But, this is relative. No matter what happens, this seems to be the new normal.
Gas prices are overseeing oil prices, on average, due to a lot of complicated concerns. Of course, there is more to the story. Professionals are asking about what is happening right now, but a lot of the answers can likely be found in 2011 when this trend really began to stick for a long duration of time. What was happening back then?
The larger answer has to do with something called “Reformulated Blendstock for Oxygenate Blending. It is the standard premiere attribute that sets gasoline prices. The price for gasoline is tied to the reformulated blendstock price almost as much, if not more so, than the price of oil. So, the price of oil, gas, and reformulated blendstock basically forms a trifecta. They all affect each other. If reformulated blendstock goes haywire, in short, it can dramatically alter the contingent prices of the other two arcs in this trifecta. The New York stock exchange relies on the reformulated blendstock rates, for better or worse, and this is significant. It is one of the main reasons for the major discrepancy in price which is still being felt today. Readers can check over here for greater details.
Is this trend still continuing? The answer is yes- kind of. Oil prices and gas prices are not internally and fundamentally connected in the same way. If this has taught oil and gas investors anything, it is that the industry is not the black-and-white standard many thought it was. There are variables that can turn it all on its head. Investing in oil or gas may not be about investing directly in oil or gas at all. It may be about thinking outside these circles and investing in the system that propels oil and gas. The distinction could be the difference in millions of dollars for some.