{"id":39538,"date":"2015-01-26T12:57:12","date_gmt":"2015-01-26T18:57:12","guid":{"rendered":"http:\/\/stateimpact.npr.org\/texas\/?p=39538"},"modified":"2015-01-26T16:58:03","modified_gmt":"2015-01-26T22:58:03","slug":"oil-explained-what-is-brent-and-wti","status":"publish","type":"post","link":"https:\/\/stateimpact.npr.org\/texas\/2015\/01\/26\/oil-explained-what-is-brent-and-wti\/","title":{"rendered":"How Crude Oil Prices Drive the Cost of Gasoline"},"content":{"rendered":"
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Lucy Nicholson\/ Reuters\/ Landov<\/p>

An exploratory oil well in California. Oil companies base their decisions to drill around the "benchmark price" of crude oil.<\/p><\/div>\n

If you’ve followed the drop in oil prices over the last few months you might have noticed the words “Brent” and “WTI”\u00a0being thrown around without much explanation.\u00a0The price of these benchmark crude oils influences everything from how big oil companies invest in drilling, to the amount you pay to fill up your car. So what exactly are they?<\/p>\n

The first thing to remember is that the crude oil we refine into gasoline comes in a lot of different varieties from all over the world. They have different names<\/a> and some of them, like Tia Juana Light sound more like a refreshing beverage than an oil.<\/p>\n

To make buying and selling all these different crudes simpler. People in the industry use benchmark oil prices. Brent crude, and West Texas Intermediate (or WTI) are the two big ones.<\/p>\n

“So somebody will write a contract that says, I will sell you Crude X from the gulf of Mexico at WTI plus a dollar,” says\u00a0Tim Hess, lead analyst for the US Energy Information Administration\u2019s short term energy outlook.<\/p>\n