Thank you for the excellent responses to my previous bleg on refined oil prices.
Sadly I am in need of a little more help
According to the data series kindly provided by John Macilree the price of refined fuel has jumped pretty sharply, even as crude prices have stayed low. I am wondering if anyone knows why this has happened.
I have five potential theories:
- A cost shock to refineries around the world,
- World demand for oil has recovered increasing demand for the refined product – however, there has been stocks of crude oil (implying that it won’t show up in the crude price until later),
- Recent price movements have given refiners a view of the elasticity of demand – and they have discovered that the profit maximising price is actually higher,
- Refiners have fallen into a position where it is easier for them to tacitly collude,
- Prices had fallen “too sharply” as crude fell, and the recent steep increase is a correction to equilibrium.