less costly to refine, and therefore sell at a premium?

CFA Level II Alternative Investments
#1

from schweser notes

  • Crude oil from different regions has different characteristics. Light oil (high viscosity) and sweet oil (low sulfur content) are less costly to refine and, therefore, sell at a premium relative to heavier or higher sulfur crude oils.

How is that something is less costly to produce be sold at a premium to more costly product?

#2

As a refiner, would you prefer buying crude oil that is cheap to refine, or crude oil that is expensive to refine?

If there’s more demand for light or sweet crude, is the price likely to be higher or lower?

#3

Ah, I see. The refining process is borne by the buyer, not the seller. okay, got it thanks.

#4

You’re quite welcome.