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MarketsExplainerPast Article

Oil Is a Price and a Cost

The spot quote is a market. The heating bill and the freight invoice are what the quote becomes later.

By Jonah Peck, Energy Correspondent

New York1 min read

brown concrete building during daytime
brown concrete building during daytimePhoto by Tomas Eidsvold on Unsplash

A spot price for West Texas Intermediate is a dollar figure for a barrel at a named place, on a named day. The St. Louis Fed publishes one such series, the Cushing, Oklahoma spot price.

A household does not buy Cushing crude. It buys gasoline, or it pays a fare that includes fuel, or it heats a building. Those prices move with the barrel on a lag, and with taxes, refinery margins, and local supply that the spot quote does not itemize.

So a move in the spot price is a fact about the spot price. It is not yet a fact about next month's invoice.

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