Gasoline
Gasoline is a vital fluid to the economy as blood is to a person. Without gasoline and diesel fuel the world as we know it would grind to a halt. It was not invented; it is a natural by-product of the petroleum industry, kerosene being the principal product. It is made from crude oil. The crude oil pumped out of the ground is black liquid called petroleum. This liquid contains hydrocarbons and the carbon atoms in crude oil link together in chains of different lengths. Production of gasoline depends mainly on the economy of the country. For instance, in India diesel is in much demand and therefore more emphasis is laid on production of diesel. On the other hand, US is a gasoline-based economy, thus gasoline is of prime importance to them. Moreover, the ‘light sweet crude oil’ used by the US yields more gasoline.
A 42-gallon barrel of crude oil produces about 19.5 gallons of gasoline after refining. Oil is broken down into the following components: 19.5 gallons is used to produce gasoline, 9.2 gallons are used to produce distillate fuels (such as Heating Oil), 4.1 gallons go for the production of kerosene jet fuel, and 2.3 gallons are used in the production of residual fuels. The remainder is primarily for chemical production and lubricants.
Gasoline characteristics are also affected by other ingredients that may be blended into it, such as ethanol. Most of the fuel ethanol added to gasoline is made from corn grown in the United States. The gasoline performance must meet industry standards and environmental regulations that vary by location.
The world demand for gasoline averages about 20 million barrels a day. Of this, US consumes the most with an average daily demand of 8 million barrels a day. The demand increased to over 9 million barrels a day in 2007, but tempered to about 8.9 million barrels per day by December 2008. In 2007 U.S. refineries produced 90 percent of the gasoline used in the United States. Although the United States is the world’s third largest crude oil producer, less than 35 percent of the crude oil used by U.S. refineries is produced in the United States. Net petroleum imports (imports minus exports) accounted for 58 percent of total petroleum consumption. About 48 percent of net petroleum imports were from countries in the Western Hemisphere, 18 percent from the Persian Gulf, 22 percent from Africa, and 12 percent from other regions. Most gasoline is used in cars and light trucks. It also fuels boats, recreational vehicles, farm, construction, and landscaping equipment.
There are so many factors, which affect gasoline prices, many of which are unpredictable, such as natural disasters, changing governmental policies and evolving international relations. Uncontrollable environmental factors can significantly impact the price of oil and thus the price consumers pay for gasoline. Generally, the demand for oil in the form of gasoline rises during the summer, when automobile and air travel increase. Correspondingly, the price for gasoline tends to be higher during the summer months than it is during the remainder of the year, with other factors being constant. While this is not always the case, the price of gasoline is affected by the magnitude of demand and thus follows a somewhat seasonal fluctuation.
A future trading in gasoline is so popular, now gasoline futures are globally traded in New York Mercantile Exchange and Intercontinental Exchange.
The commodity market regulator Forward Markets Commission (FMC) has cleared Multi Commodity Exchange’s (MCX) will launch futures trading in gasoline.
