Prices of hydrocarbons // Variation of markets - Analysis

First of all, I would like to emphasize that the factors that influence any market are varied, although in this post I will focus basically on two that are the supply and demand, now if the offer and the demand have influence in the market, the following question arises:

What market would we be talking about?

In this case it would be the hydrocarbons market, mentioned the hydrocarbons since apart from the price of oil, natural gas also varies its price in the demands of the market, that is why the bases for these questions will be treated several points, in the one that focuses the factors that influence the variation of the prices of hydrocarbons worldwide.

Factors that influence the hydrocarbons market

The demand of the different types of hydrocarbons such as crude oils, natural gas and derivative products is what ultimately controls the world supply in the markets. If demand is high, production is also high and the price of each substance tends to remain stable or rise if there is or is perceived to be a shortage of a certain supply in the short, medium or long term. The high demand encourages, almost instantaneously, unusual activity in all branches of the industry to supply consumption.

In other words, there is constantly a progressive increase in the need to use hydrocarbons to meet certain needs, needs which are increasingly rising, so that the different world markets are forced to increase their production of oil and natural gas. When we observe that prices remain stable, new ideas emerge from hydrocarbon producing nations that control the markets to do something that increases demand and thus raise prices, and in this way continue with the monopoly and development of large transnationals.

What ideas come from the monopolies that control the hydrocarbons markets to raise their prices?

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If we review the history a bit, there are many factors that raise oil prices, but there is one that I consider to be the most important use, and it is nothing more than the generation of wars between nations, where excessive use of the arms, transport and generation of energy, makes that the demand of petroleum increases and therefore the rise in the price of the same ones.

When the demand goes down, the effect is immediately felt in all the activities of the industry. First, the price of crude oil tends to fall. The volume of production must be adjusted to descending levels and this has repercussions from wells to gasoline outlets, including all operations upstream and downstream of the business. Naturally, it affects all programs and projects in the industry for economic reasons.

As we can analyze the market is divided, that is, there is no single market to market the activities of buying and selling of hydrocarbons, which means that when demand decreases in the consumption of hydrocarbons, not all markets are concerned, On the contrary, there are sometimes even political interests that mean that while a market has a rising price, other markets have declines in prices, and therefore feel obliged to lower their production, given that these resources, such as hydrocarbons, are non-renewable sources and tend to run out, it is not convenient to keep their production constant while lowering their prices.

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Oil marketing

Within the international marketing aspects of hydrocarbons, countries are simply classified as buyers and sellers or importers and exporters. However, to broaden the meaning of this classification it is necessary to focus on other aspects.

Producers and net importers

There are countries that are producers of hydrocarbons, but in many cases their production does not exceed the net and domestic energy demand of their nation, which makes them become mixed marketers to call them in some way, that is, they produce and import hydrocarbons. To cite an example, being any nation within the globe that wants to satisfy its consumption needs, call it energetic or of any other kind, and in case you need two million barrels of oil per month to cover the energy demand of your country , and if being an oil producer only produces five hundred thousand barrels of oil per month, this country would be in need of importing one million five hundred thousand barrels of oil to cover its demand, which leads us to reflect that not always the one that produces the most oil It is the one that exports the most, but this depends on whether its production meets the needs of its demand.

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Net producers and exporters

In this case, the countries, despite their energy demand, manage to have such production that they manage to cover their internal energy expenses and their surpluses are exported to other nations and markets. For this case we can mention the OPEC market.

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Now yes, the decisive question comes, really then, what price can a barrel of oil take?

It is not easy to answer the question, there are so many basic and related operations that in exploration, drilling, production and transport have to be successfully completed in order to achieve a commercial crude oil barrel, all of which involve respectable investments, costs and expenses until they are delivered to the refineries or the facilities of other customers. In addition, above all those disbursements, each barrel must generate a certain income that guarantees the profitability of the business. The same considerations are applicable to manufactured petroleum products.

In determining the price, the quality and characteristics of crude oil are of great importance, which by comparison and competition with similar crude oils serve the refiner to evaluate the quantity, volume and quality of products obtainable from that crude and the prices these products have. in the market.

Hence, the crude oil purchased by the refiner must also reimburse, in addition to its price, the investments, costs and expenses of the entire processing train plus the desired profitability of these operations, in accordance with industry practice and standards.

Consideration - Reflection

I just hope that the factors that influence the market of hydrocarbon prices does not affect the quality and well-being of life of humanity, always taking care of our environment, it is necessary that we reflect on the inference that is marking our lives the variation of the prices of oil and natural gas, our economies have to evolve beyond the dependence of these prices, marking priority in resources with less volatility in the world economy, it is necessary that the price of hydrocarbons be adjusted to the needs energy prices of the present, without having to overvalue prices, but neither underestimated, since many economies of different countries depend clearly on the production and export of oil and natural gas.

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