A Day On The Trading Floor
There's a long list of reasons for the high cost of gasoline: the tight worldwide supply of crude, political instability in some oil-producing countries and in the U.S., a shortage of refineries.
That information is used by energy traders who set the price of a barrel of oil.
CBS Evening News Saturday anchor Thalia Assuras caught up with one of those traders and got an inside look at the frenetic action in the New York trading pits.
Eric Bolling's frantic day begins with a calm ferry ride.
The former minor league baseball player is a 22-year veteran of the New York mercantile exchange — the world's biggest trading center for energy.
When Bolling first gets to the office he goes over news, overnight trades, and historical charts.
"So you just try to look for patterns? ... But are you really guessing?" Assuras asks Bolling.
"Sure," he says.
But Bolling is certain of at least one thing: a barrel of oil will probably cost more than yesterday.
"If there is no demand for gasoline, you don't need crude oil. When gasoline is in high demand, people scramble to get crude to ram it through refineries," says Bolling.
"Is there a huge demand for gasoline now?" asks Assuras.
"Huge, huge," says Bolling.
Traders like Bolling don't actually buy or sell barrels of oil. Instead they swap futures, or contracts.
Those are agreements for a specific amount of crude oil, delivered on a future date. The same contract can be bought and sold at different prices up until a lock-in date. The final cost of that crude will eventually account for a bit more than half of the price of a gallon of gas. The rest is refining, taxes, transport and profits.
At 10 a.m., when the trading floor opens, oil is at $69.94 a barrel. Suddenly the floor becomes a shopping center of chaos.
"You're fighting down, you're pushing. I've had shirts ripped, it's a physically demanding job," says Bolling. "This guy says this, that guy says that. … So it's a constant flow of information that you have to take in and digest and make your trading decision."
At 11:10 a.m., oil is at $69.90 a barrel and news of possible trouble with Iranian oil supplies sweeps across the floor.
"Things come out in the Middle East over the weekends," says Bolling. "And that really incites the whole market higher."
At 12:08 p.m., oil is at $70.50 a barrel and Bolling is downright bullish.
"We opened a little bit unchanged. Now 50, 55 cents higher — kinda what I was looking for. I'm probably looking for it to go a little further going into the weekend," says Bolling.
But instead there's a retreat — at 1:30 p.m., oil is back down to $70.05 a barrel. Blame fatigue or the effects of a heavy lunch.
"Very, very relevant is the last five minutes of the trading day," says Bolling. "I think that is going to set the tone for next week."
He's right. A rush at the close pushes oil back over pushes oil back over $70 a barrel. At 2:30 a barrel is at $70.19.
Overall, Bolling says the day went well.
"As planned, the gasoline market was strong -- it led the way," he said.
Does he have advice for the rest of us?
Yes, but it's not good.
"Unfortunately I think we're probably gonna be here for a while — at these levels — maybe even higher. ... I hate to be the guy who says get used to it — but get used to it."