Genre: Instruction

Question What is ' drilled ' oil valued at ? The first time a single barrel of oil is sold , after it is drilled from the ground , what does it sell for ? How many times does it change hands ( The thing that changes hand - contract that is ' the future ' ' option - WTH IS IT ? ) before final destination ? Then when it reaches what the end what is it 's cost ? If the number is never static can I get a historical ' list ' If that is too much to answer .... With no one in " the middle " how much does a freshly filled barrel of oil cost today ? Is there an average " X " less than the ' delivered ' ? Answer There is some variability in the price of oil depending on where it is drilled , what the quality of the oil is , and other factors . Here 's a great place to find info on oil prices : http://phx.corporate-ir.net/External.Fil... This is from Valero's investor relations webpage . Valero is the largest US refinery company . The spread between gas prices and oil prices is very important to Valero because Valero buys raw oil , refines it , and then sells it as gas . The difference in these two prices is Valero's profit . The chart shows several different grades of crude oil and how much they cost by location . It also shows different refined products and their prices ( including gasoline , diesel , residential fuel oil , etc. ) . http://www.valero.com/InvestorRelations/... -------------------------------------- ... Oil futures generally track the average price of oil across the globe pretty well . The futures contracts will specify what grade of oil is being delivered and when . Oil futures that are very near expiration are going to reflect very closely to actual oil prices . Futures contracts are financial contracts that have their roots in the medieval ages . Originally the idea was that buyers would purchase a commodity from a seller before the seller had the commodity . For example a cloth maker might purchase 100 bags of wool before the farmer's sheep had any wool . Why would they do this ? Because the farmer would then have the money to feed the sheep so that there would be wool in the future . The farmer would get paid in advance and earn a profit , and the cloth maker would provide financing to the farmer ( often reaping an additional financing profit similar to earning interest ) . However in this case the cloth maker runs the risk that the price of wool might drop in the future . If so , the cloth maker might have been able to purchase the cloth at a lower price . On the other hand , if wool prices rise , the cloth maker gets a better price and can sell higher priced cloth for an even higher profit . Naturally this lends itself to speculator activity . Some people do n't have any intention of purchasing an underlying commodity , but they buy the futures contract ( providing financing to the commodity seller ) , wait for the commodity price to go up , and then sell the contract to somebody else later for a profit . It has actually gotten to a point where the futures contracts do n't even represent real commodities , instead speculators just bet on commodity prices in a zero sum game . The winner pays the loser and that 's it ! I would read some books on futures and options . Futures are complicated , but it is interesting and valuable information to have .