eli5: why the current price of gas is much higher than in 2008 when the price of brent barrel was quite higher?
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It’s complex. It depends on where the oil is and how do you get it to where you need it. Not all oil is the same. Saudi Arabian oil is really easy to refine because there’s not a lot of sulfur. You don’t need specialized equipment to refine it. Oil from Canada or from Venezuela has a lot of sulfur. The US is basically geared toward refining this type of oil but not oil out of Saudi Arabia. Europe on the other hand mostly refines Middle Eastern oil but not the type of oil produced in Canada/Venezuela. Refining Saudi oil is a lot cheaper than refining Venezuelan oil and refineries can’t freely switch between the types because they require different equipment. This also means that a barrel of crude oil isn’t the same globally. There are different types of crude and demand for those types varies based on a lot of factors. When we say crude oil prices, we’re using a really high-level average of all the oil markets and types of oil out there.
Also people seem to think that crude oil = a fixed amount of gasoline. It doesn’t. Crude oil is a mix of a lot of different fuels such as gas, kerosene, diesel, etc. And depending on where you get the crude oil, there can be huge differences in what fuels are in it. in other words crude oil isn’t just crude oil. It’s extremely complex and there’s a lot of different types and the prices for those types will have different effects on the price for gasoline. Not to mention that gasoline isn’t the only product refiners are interested in. For example, kerosene is used mostly in jet fuel. Diesel for transport. Gas for passenger vehicles. Refineries will prioritize different fuels based on demand and gas isn’t always the most profitable one for them to aim for. And they can change some fuel types through hydrocracking.
Yes oil prices effect gas prices. Because oil is a raw material to make gas. But there’s a ton of other factors that come into play between that barrel of crude oil and your local gas station. From the EIA, a barrel of crude oil (42 gallons) will produce an estimated 11-20 gallons of gas in the US dependent on a lot of factors. https://www.eia.gov/tools/faqs/faq.php?id=327&t=9. Then you need to include the cost of the various additives required for the gas before you can put it in your car. Then the cost to get the gas from the refineries in Texas (Most US refineries are in the Gulf) to your local gas station which includes drivers/trucks, trains, or pipelines. The price of all that other stuff, from the additives to the truck drivers, cost more today than they did in 2008. Not to mention everything else going on in the world that wasn’t happening in 2008 causing all sorts of chaos in market prices.
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