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that takes a percentage of the price from crude oil on long term contract and a percentage on spot market prices. In a normal market, the price rises and falls only a few cents with rises and falls in spot market price. Sometimes the spot market is cheaper than contract, sometimes the opposite.
Right now, we have a market that has been pushed into a bubble by hedge funds and large investment banks. Golden Sacks is foremost among these. It's easier to create bubbles in commodities than in stocks, and petroleum is one of the most vulnerable of all. It's obvious that the laws of supply and demand have nothing to do with the market at present, since we're drowning in crude oil.
Producers need to change their pricing formula to reflect the new reality and the vulnerability of commodities to bubble markets.
Until they bother to do that, expect to pay through the nose at the pump.
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