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About Unleaded Gasoline (HU)
Distillation is the primary method of refining Crude Oil into
Heating Oil. The crude oil is heated at the bottom of a tall metal
tower. As the crude gets hotter, it turns to a gaseous state the
vapors rise. As the vapors rise, they cool. Each Crude Oil by
product, in its gaseous state has a specific cooling temperature,
corresponding with a height of the tower. At these predetermined
heights in the tower, pipes lead off to separate the various petroleum
products. Heavier fractions like fuel oils, and diesel fuel are
taken from the bottom part of the heating tower. Lighter fractions
like butane, gasoline, and kerosene are taken from the top of
the tower. The heating tower produces the rough materials for
the six basic categories of petroleum products.
Gasoline includes premium and regular grades, both leaded and
unleaded, and other refinery products. For over a decade, Gasoline
has been the largest petroleum product refined in the United States
and the world. Almost three quarters of the total usage of gasoline
is done by individuals, with demand ebbing and flowing with the
publics driving habits.
The supply of Unleaded Gasoline is directly related to the supply
of Crude Oil, since Unleaded Gasoline is a product of refining
Crude Oil. The supply or production of Unleaded Gasoline is best
understood by breaking it down into two components: Crude Oil
supply and available remaining supply of Unleaded Gasoline. The
supply of Crude Oil is influenced by oil discoveries and technological
advancements in drilling techniques. The advent of deep water
oil drilling, as well as other technological advancements in oil
findings, are important factors in considering the future supply
of Crude Oil.
Available supply of Unleaded Gasoline is the amount Unleaded
Gasoline already refined and ready to be used. The American Petroleum
Institute releases oil supply numbers (or stocks) weekly. Most
major papers present this information. When the available stocks
are large, consumers and distributors have to rush to the market
to meet causing prices tend to languish. When the stocks positions
are low, consumers and distributors have trouble obtaining needed
Unleaded Gasoline and will generally pay higher prices to meet
their current needs.
Political considerations also play an important role in the available
supply of Unleaded Gasoline. In 1973, the major Arab oil producing
countries banded together to form a cartel to restrict the supply
of Crude Oil on the world market to inflate the price. The Organization
of Oil Exporting Countries (OPEC) has grown considerably since
1973, but its power has diminished greatly in recent years. NON-OPEC
countries are producing more and more oil. OPEC, even in its slightly
diminished capacity, is still the major political force in the
oil production area. OPEC countries include: Saudi Arabia, Kuwait,
United Arab Emirates, Algeria, Iran, Iraq, Libya, Qatar, Algeria,
Ecuador, Gabon, Indonesia, Nigeria, and Venezuela.
The demand for Gasoline is dependent on two main factors: weather,
and consumer habits. Weather plays a critical role in the demand
for Gasoline. Demand for Gasoline is heavily influenced by the
driving habits of the population, which are greatly influenced
by the weather. As such, Gasoline demand tends to rise in the
summer during the "summer driving season". When the
weather is nice, people tend to drive more. Couple this propensity
for more driving with warm weather and more use of automobile
air-conditioners, which greatly diminish fuel efficiency, and
the market experiences more demand and less efficient use of the
available supply. The demand for gasoline is also greatly influenced
by heating oil demand, as well as Government fuel efficiency standards
and pollution control standards.
The macro factors affecting demand for Crude Oil, also affect
the demand for gasoline. These broad based factors are income
levels, population growth and per capita income levels, exchange
rates, and consumer attitudes concerning fuel usage
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