Oil Companies Buy Oil at West Texas Intermediary Price, and then Sell It at the Higher Brent Crude Price Used In Europe

 

We noted yesterday that major U.S. oil companies are artificially raising gas prices to U.S. consumers by using the European Brent crude oil pricing yardstick.

USA Today touched on one side of this issue in February:

For the first time since 1949, the United States exported more gasoline, heating oil and diesel fuel last year than it imported, the Energy Department reported today.

***

In a piece headlined “Oil Refiners Look To Exports Growing Profit,”24/7 Wall St. writes: “The rise in imports could be the result of the decline in refined products, but more likely is that the imported crude is being refined and the refined products are being exported.”

The article explains what major oil companies and U.S. refineries — Valero Energy, Tesoro, Marathon Petroleum and HollyFrontier — are doing to boost their profit margins:

Crude at Gulf Coast refineries is priced at the Brent crude import price, no matter where it comes from. Refineries in the US interior are typically able to get the vast majority of their crude at or below domestic the WTI [West Texas Intermediary] crude price. Today, a barrel of Brent costs about $121, and a barrel of WTI costs about $106. That $15 difference in feedstock pricing pays dividends at the refinery. …

To boost margins at Gulf Coast refineries, Valero and the others are exporting more refined products, both gasoline and the higher-priced diesel fuel. …

The secret to making a profit in refining these days is for refiners to source crude oil domestically and then sell the refined products to US consumers at prices based on imported oil. Valero can’t do that, but Marathon, Tesoro, and HollyFrontier can. …

Despite higher-than-expected oil inventories and less driving by Americans, the price of crude oil finished higher today.

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  • That is a natch for them. Even if it means bringing down civilization to get their greedy profits.

  • gozounlimited

    Looks like the whole thing is coming down …. Dodd-Frank …. too little too late

    JP Morgan Suffers ‘Massive’ Losses: $4.2 Billion Probable; May Spread to Entire Sector

    In an unexpected after hours call with investors CEO Jamie Dimon said JPMorgan was facing massive losses – legal losses of $4.2 billion were reasonably possible, he said — with trading losses totaling $800 million in the second quarter.

    And Dimon said it could take until the end of the year to restructure the portfolio.

    Although information was still coming together at the time of writing, the Fast Money traders say developments look like they’re a game changer.

    “I can almost guarantee it’s not just JPMorgan.” adds trader Guy Adami.

    “JPMorgan looks like it’s going to bring down the entire space,” adds Steve Grasso.

    In other words, all the traders are expecting financials to sell-off broadly on Friday.

    “The sector hasn’t been doing well anyway,” explains Steve Grasso. “The group has been breaking down. This feels like it could be a nail in the coffin.”

    read more: http://www.shtfplan.com/headline-news/jp-morgan-suffers-massive-losses-4-2-billion-probable-may-spread-to-entire-sector_05102012

  • gozounlimited

    Looks like the whole thing is coming down …. Dodd-Frank …. too little too late

    JP Morgan Suffers ‘Massive’ Losses: $4.2 Billion Probable; May Spread to Entire Sector

    In an unexpected after hours call with investors CEO Jamie Dimon said JPMorgan was facing massive losses – legal losses of $4.2 billion were reasonably possible, he said — with trading losses totaling $800 million in the second quarter.

    And Dimon said it could take until the end of the year to restructure the portfolio.

    Although information was still coming together at the time of writing, the Fast Money traders say developments look like they’re a game changer.

    “I can almost guarantee it’s not just JPMorgan.” adds trader Guy Adami.

    “JPMorgan looks like it’s going to bring down the entire space,” adds Steve Grasso.

    In other words, all the traders are expecting financials to sell-off broadly on Friday.

    “The sector hasn’t been doing well anyway,” explains Steve Grasso. “The group has been breaking down. This feels like it could be a nail in the coffin.”

    read more: http://www.shtfplan.com/headline-news/jp-morgan-suffers-massive-losses-4-2-billion-probable-may-spread-to-entire-sector_05102012
    ************
    Someone needs to tell Mr. Dimon hedging on Euro debt is a loser…..

    Make the Bankers Pay: Iceland, Ireland pushing back against neo-feudalism

    Editor’s Note: For more information, please read “Farmers group wants Ireland to follow Iceland and burn the bondholders.”

    Across the dominion of the corporate-financiers on Wall Street and in the city of London, the reckless Ponzi schemes destroying the West’s economy and plunging it into an economic depression have left politicians, the bought-and-paid-for servants of corporate-financier hegemony, wringing the public dry to cover losses. In reality, when an enterprise fails because of criminality, incompetence or both, citizens should not be forced to pass the hat around to “bail them out.”

    They are declared bankrupt, their assets (if they have any) are stripped, often if fraud is involved, executives and board members go to jail, and society attempts to fill the void with sounder enterprises run by more reputable people.

    Now, however, when the fraud and failure unfolds amongst the highest levels of corporate-financier power, amongst men who have organized wars that have sent millions to their deaths, overseen social “projects” that have left hundreds of thousands of women forcibly sterilized; instead of going to jail, these criminals are showered with self-aggrandizing awards from institutions of their own creation. This faux-authority, faux-legitimacy has left the people subjected to their machinations with the illusion that they must pay for, heed, follow whatever solutions are then prescribed by the very elite who created the problem in the first place.

    read more: http://www.activistpost.com/2012/05/make-bankers-pay-iceland-ireland.html
    ************

  • Iraq will be number two in OPEC before the end of the year.

    That must free up some of the shortages that might otherwise prevent such exports.

  • Not as bad as went Carter said Texas oil could only be sold for $8 a barrel to US refiners but the refiners could pay $40 a barrel to Iran for oil.

  • “Oil Companies Buy Oil at West Texas Intermediary Price, and then Sell It at the Higher Brent Crude Price Used In”

    Not Intermediary; Intermediate

    West Texas Intermediate – Wikipedia, the free encyclopedia
    en.wikipedia.org/wiki/West_Texas_IntermediateWest Texas Intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. This grade is described