How do you calculate the price of a Barrel of Oil?

Question

We always hear that the price of a barrel of oil has gone up to X amount, but how is that amount reached. The oil companies claim that this is due to problems, and that they need to charge more to pay for these inconveniences, so how do the oil companies come up with these prices?

Answer 1

Big oil companies are part of the problem, but not all of it by any means. Most foreign oil production is controlled by the governments involved (Saudi Arabia, Venezuela, and so on). Those governments formed the OPEC cartel, and it is OPEC that controls and manipulates supply on a much larger scale than, say, Exxon closing a refinery. OPEC exists to make money for its members, and they realize that they can raise prices by controlling production without seeing a corresponding drop in demand.

The following article has a good discussion of other reasons why oil is going up (Sharply increased demand from China and India, war in the mideast, and so on):

http://news.yahoo.com/s/usatoday/20071108/cm_usatoday/likeitornot100oilforcesnewenergypolicyonus;_ylt=AtuhuvWE8fjn9Qg7mwLv_8ys0NUE

Answer 2

OPEC?

I think they would charge more if OPEC wasn't involved.