One key point is that it requires at least one other point, of disruption. The article mentions Algeria, but any number of other countries are possible. Ht nc
In any case, the basis for our price per gallon is thus: There are 42 gallons in a barrel of oil. Although not important for our calculations up to 20 of those gallons can be made into gasoline, and the reaming 22 gallons are made into other items.
About 69% of the pricing of gasoline is in the oil. The rest of it is in taxes (13%) and marketing/point of sales costs (12%). However these are relatively fixed costs. So we will use $3.00 as our basis for fixed costs: $3.00 x .31% (which is 100-69) = $ .93 fixed costs. $220/42 = $5.23 + .93 = $6.16. Note that the calculation makes the assumption that all 42 gallons of product from the barrel of oil are of equal value and that the price of the barrel is equally apportioned. This is not likely true, but I am making the guess that gasoline sits somewhere in the mid-point between jet fuel (4 gallons) and other products (8 gallons). There are some numbers, numbers2 that say this is in the ballpark; possibly a little low. It is probably a good bench mark for the lower cost areas of the U.S., but you would need to add considerably more for such areas as California and the West Coast which have been running about 16% higher.
Experts at Japanese bank Nomura raise specter of doubling in oil price if unrest in Libya continues.
Up to half of Libya's oil production is now estimated to have been shut down as a result of the crisis engulfing the country – creating supply concerns that pushed the price of Brent crude above $110 a barrel, now experiencing its biggest three-day gain in a year.
Commodity analysts at Japanese bank Nomura raised the possibility that prices could perhaps hit $220 a barrel. In a note to clients the bank warned: "The closest comparison to the current unrest in the Middle East and north Africa is the 1990-1991 Gulf war. If Libya and Algeria were to halt oil production together, prices could peak above $220 a barrel and Opec spare capacity will be reduced to levels seen during the Gulf war and when prices hit $147 in 2008." Simon Goodley and Terry Macalister at the U.K. Guardian.
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