The barrel contains 159 liters (42 gallons) of oil, and the refinery can produce about 1.78-2.54 liters of gasoline from 3.8 liters of crude oil. One barrel of oil will also produce approximately 64 liters of other useful petroleum by-products such as plastic, propane and ammonia.
Currently, 62% of readily available crude oil is located in the Middle East, and the main players are Saudi Arabia, Iraq, Kuwait, the United Arab Emirates and Qatar. There are four main factors that regulate the price of this valuable oil.
a) Availability or supply of crude oil
b) Oil consumption rate
c) Financial markets
d) Government policies and regulations
The fundamental economy dictates that a large supply of oil will turn into lower demand, which in turn will cause low prices, and conversely, if we have a small supply of oil, it will cause high demand and in turn higher prices. With this basic concept, oil is traded on the financial market. An oil speculator invests in oil futures benefits – basically betting on how much oil will cost in the future. Government policies and regulations also have a major impact on oil prices, for example, laws designed to prevent climate change are enforced through taxation, and this increases gasoline costs for consumers.
An important factor that also regulates the price of crude oil is that the price has been expressed in US dollars over the last 50 years, so fluctuations in that currency can cause the cost of buying a barrel of oil to fluctuate. Recently, there has been talk of switching from a transaction denominated in US dollars to the euro or to a basket of currencies. It remains to be seen whether this will turn out.
Finally, we would like to end the discussion of prices by mentioning that in 1956, the geophysicist Hubbert theorized that the world would eventually reach a top level of oil production, and he coined the term “peak oil”. Once this level is reached, the world would slowly begin to deplete its oil reserves, causing a dramatic and fatal rise in prices.
So why does gasoline cost more in summer? Well, there are a multitude of factors why gasoline usually goes up in price during the summer months, and one of the reasons is increased demand and better weather, resulting in more motorists on the roads. Another key reason is that, when the weather starts to heat up, utility companies are temporarily closing some of their refineries to be able to perform the necessary regular maintenance, and this could lead to disruptions in the supply chain for gasoline distribution. It should be noted that there are actually two fuel blends: winter and summer gasoline. In summer, gas stations have a seasonal transition, as the summer mix helps reduce smog during the summer ozone season, which runs from June 1 to September 15 each year. This initiative was launched in the United States in 1995 as part of the Reformed Gasoline Program (RFG). So how exactly does a summer blend help reduce pollution? Summer gasoline contains fuel additives known as “oxygenates” that clean combustion, and this is useful in reducing pollution during the summer season. To learn more about crude oil, read this book.