Why is the cost of gas tied into the price of oil (UK)?

Question

I don't understand why it's tied together, it's like saying the price of floor cleaner is tied to the price of pens, Why and when did this happen? Why doesn't the governement/the EU stop this?

Answer 1

Crude oil is refined to separate it and modify it into products that include propane gas, butane gas, naphtha, gasoline, kerosene, jet fuel, heating fuel, bunker oil (to run big ships' engines), lubricants, asphalt (for roads), as well as a number of plastics.  If the price of oil goes up, the price of all these products will go up accordingly.

By the same token, if some other product requires one of the crude oil products to produce it, the price of that product will also go up if the price of crude oil goes up.

Answer 2

Gasoline is created when crude(raw) oil is refined(cleaned). Just as corn value will go up because of bio fuel(ethanol; a fuel additive) becomes more demanded. Bio fuel is not a good alternative considering farmers are stopping to produce other things such as wheat that we make flour with. Thus for the high demand and profit we will lose other beneficial commodities.

Answer 3

Gas and oil are produced by the same process deep way underground.

Answer 4

I believe it's actually a european agreement that actually allows this.

Yes, natural gas is extracted by the same companies, Royal Dutch Shell, Total etc.. that extract oil. And in oil reserves you also get some natural gas (sometimes), which i believe is the argument for the cost being related.

What I find puzzling myself is that there are natural gas fields that obviously have nothing to do with oil, yet the price is still fixed for all natural gas. Someone's making a mint, and it isnt anyone with heating bills.

Answer 5

as they heat crude oil at high temperatures, gas comes off first, followed by liquid gas, then gasoline, the petrol (petrochem) then down the line to various inks and eventually thick crude bitumen type oil which they use to make tar or plastic bags and all things bad for the environment

Answer 6

What do you think they make gasoline from?  OIL!!!!

Like if the price of potatoes went up, so would the cost of french fries.

Answer 7

They don't want to stop it because so many of our Mp's sit on the boards of the energy companies.

Answer 8

in the UK we don't use gas we use petrol for our cars

Answer 9

oil is on the world market and governments can not control the price other than be regulating the market...also oil is traded in USD so as the American dollar rises and falls that affects the cost as well .

Answer 10

cause they make gas from oil,   floor cleaner is not tied to pens cause they have nothing to do with each other,