eli5: is the price of crude oil i see on the futures market the same as the actual price refiners are paying?
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In many cases, they aren’t. For stuff like oil, electricity etc. , there are two big markets. The spot market for customers(refiners) who want things NOW and the future market where customers (refiners) want to make contracts for future transactions.
The spot market doesn’t contain an extra tax for getting assurances. You simply pay the current price for the crude oil. If I want to get X liters of oil in the future, some seller might do it but wants to get extra money for assuring you to deliver the oil in let’s say 1 year. The oil price might be higher, the oil price might be lower. One party is always winning in this deal, but the seller will charge you a bit of extra money to put this deal more in their favour.
Most of the times, the actual prices are wastly different. Refiners could pay the price of the spot market since they didn’t make any contracts preemptively. If they made contracts on the future market, it depends incredibly on the market sentiment, on the time span you want to get your oil delivered etc. If you as a refiner got a contract one year ago for today, you certainly got a deal in your favour (who could have anticipated such a rise one year ago?). If you made a contract one month ago for today, not so much. Everyone knew about the oil shortage already.
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