That is not true at all, as they plastered on every news station here at the start of the falling gas prices was do to once again Saudi Arabia lowering the cost per barrel that they charged. They then here recently just upped the cost per barrel, which in then is why our prices just raised back up over $2 a gallon again.
The reason our gas prices fell in the first place was because Saudi Arabia lowered their price per barrel down below $100 per barrel in the past 15 years.
Saudi Arabia lowers cost on oil = lower cost on imported fuel = lower costs at the pump
It all works in a cycle just like food and other imports, if merchants have to spend more money on fuel then they charge higher prices to businesses for the products they are importing. The higher prices these businesses have to pay for products the higher they charge to consumers...................
I suggest you humble yourself....oil prices are set by speculators not Saudi Arabia.........serious your inability to humble yourself is becoming a reason many do not listen to you Kenneth!
How Are Oil Prices Determined?
3 Important Factors That Determine Oil Prices
Oil prices are determined by
commodities traders who bid on oil
futures contracts in the commodities market. These contracts are agreements to buy or sell oil at a specific date in the future for an agreed-upon price. They are executed on the floor of a
commodity exchange by traders who are registered with the
Commodities Futures Trading Commission. Commodities have been traded for more than 100 years, and have been regulated by the CFTC since the 1920s.
Commodities traders fall into two categories. Most are representatives of companies who actually use oil. They buy oil for delivery at a future date at the fixed price. That way, they know the price of the oil, can plan for it financially, and therefore reduce (or
hedge) the risk to their corporations. Traders in the second category are actual speculators. Their only motive is to make money from changes in the price of oil.
What 3 Factors Do Traders Use To Determine Oil Prices?
There are three main factors that commodities traders look at when developing the bids that create oil prices.
First, is current supply in terms of output. This is usually controlled by
OPEC quotas. However,
U.S. shale oil production doubled between 2011 and 2014. As a result, traders believed there was a glut of oil, and bid the price down to $45/barrel. Normally, OPEC would cut supply to keep oil at its target of $70 a barrel. This time it allowed prices to fall,
since it won't lose money unless oil is $20 a barrel. Shale
producers need $40-$50 a barrel to pay the
high-yield bonds they used for financing. OPEC bet the shale producers would go out of business, allowing it to keep its dominant market share. For more, see
Oil Price Forecast.
Second is access to future supply, which depends on
oil reserves. This includes what's available in U.S. refineries and the
Strategic Petroleum Reserves. These reserves can be accessed very easily, increasing oil supply if prices get too high.
Saudi Arabia can also tap into its large reserve capacity.
Third, is oil
demand, particularly from the United States. These estimates are provided monthly by the
Energy Information Agency . Demand usually rises during the summer vacation driving season. To predict summer-time demand, forecasts for travel from AAA are used to determine potential gasoline use. During the winter, weather forecasts are used to determine potential home heating oil use.