Gas

[mikeg]

Bottom line, we ain't seen nothing yet.  Wait til it hits $200 a barrell.  Can you say economic total friggin collapse.  Mark this post.  I give it less than 7 years.

[unbreakable]

Why isn't crude oil and gasoline sold for what it actually costs to produce plus a reasonable profit margin?

Because the government makes more in taxes on a gallon on gasoline than what the oil companies make in profit on a gallon of gas.

I seriously doubt that.

[brettmcd]

Why isn't crude oil and gasoline sold for what it actually costs to produce plus a reasonable profit margin?

Because the government makes more in taxes on a gallon on gasoline than what the oil companies make in profit on a gallon of gas.

I seriously doubt that.

Well you would be wrong.

http://www.nationalledger.com/cgi-bin/artman/exec/view.cgi?archive=1&num=5314

Based upon a $3.00 gallon of gasoline, the average break-down is as follows.

    Gasoline Retailer  $.01 cents per gallon
    Oil Company   $.08 cents per gallon
    Refining   $.29 cents per gallon
    Marketing/Distribution $.32 cents per gallon
    Taxes    $.59 cents per gallon
    Cost of crude   $1.71 per gallon (delivered)

Or here is one from a government web site.

http://www.eia.doe.gov/bookshelf/brochures/gasolinepricesprimer/eia1_2005primerM.html

Refining costs and profits are combined and are equal to taxes at 19% so profit is only part of that 19%.

Here is one last one that is more recent.

http://tonto.eia.doe.gov/oog/info/gdu/gasdiesel.asp

According to the explanation of terms distribution and marketing includes profits, so its again less then taxes.

[Blackadar]

Why isn't crude oil and gasoline sold for what it actually costs to produce plus a reasonable profit margin?

Because the government makes more in taxes on a gallon on gasoline than what the oil companies make in profit on a gallon of gas.

I seriously doubt that.

Actually, it's probably pretty close.  The problem is finding accurate data.  Oil went up and refineries got squeezed - that's when $85/barrel oil translated into $2.30/gal gas.  Now refineries have raised their prices, so a $15-$18 rise in oil costs (20% or so) have resulted in $1.00 rise (over 40%) for a gallon of gas.  Of course, the falling dollar has made is more expensive to acquire oil too.  As such, trying to calculate all of these rapidly-moving variables almost impossible since current data isn't available.

FYI, taxes are about $.47 per gallon of gas.

Whether oil companies make more than $.47/gallon isn't really relevant.  It's a free-for-all with this administration letting his Texas piglet friends get fat at the oil trough at the expense of everyone else.  Oil companies, refineries, shipping companies - you name it, they're all getting rich.

[unbreakable]

Why isn't crude oil and gasoline sold for what it actually costs to produce plus a reasonable profit margin?

Because the government makes more in taxes on a gallon on gasoline than what the oil companies make in profit on a gallon of gas.

I seriously doubt that.

Well you would be wrong.

http://www.nationalledger.com/cgi-bin/artman/exec/view.cgi?archive=1&num=5314

Based upon a $3.00 gallon of gasoline, the average break-down is as follows.

    Gasoline Retailer  $.01 cents per gallon
    Oil Company   $.08 cents per gallon
    Refining   $.29 cents per gallon
    Marketing/Distribution $.32 cents per gallon
    Taxes    $.59 cents per gallon
    Cost of crude   $1.71 per gallon (delivered)

Or here is one from a government web site.

http://www.eia.doe.gov/bookshelf/brochures/gasolinepricesprimer/eia1_2005primerM.html

Refining costs and profits are combined and are equal to taxes at 19% so profit is only part of that 19%.

Here is one last one that is more recent.

http://tonto.eia.doe.gov/oog/info/gdu/gasdiesel.asp

According to the explanation of terms distribution and marketing includes profits, so its again less then taxes.

I haven't checked the bottom link, but all the data from your first link is way out of date, being from 2005.

Not only that, but it's stating the cost of oil itself as a percentage.  However, if a company both acquires the oil AND refines it into gasoline, then the oil portion also goes into their profit.

So your figures are pretty inaccurate, because it's just looking at gasoline, and not oil: the bulk of the costs in everything you cite is the oil itself.

[Blackadar]

I haven't checked the bottom link, but all the data from your first link is way out of date, being from 2005.

You'd be correct, the data from both links no longer reflect market conditions. 

Besides, the first link isn't exactly unbiased and their figures ($1.71/gal for oil) are grossly incorrect (easily shown by using the EIA's data as well as other sources).  It's akin to citing Phillip Morris research as proof for the links between smoking and lung cancer.  But then again, brett's usual MO is to obfuscate the discussion with lousy data...so it's to be expected. 

[denoginizer]

Gas prices in Europe make ours look like peanuts.  Do you guys think that is because the oil companies make more money in Europe or because of higher taxes?

[brettmcd]

I haven't checked the bottom link, but all the data from your first link is way out of date, being from 2005.

You'd be correct, the data from both links no longer reflect market conditions. 

Besides, the first link isn't exactly unbiased and their figures ($1.71/gal for oil) are grossly incorrect (easily shown by using the EIA's data as well as other sources).  It's akin to citing Phillip Morris research as proof for the links between smoking and lung cancer.  But then again, brett's usual MO is to obfuscate the discussion with lousy data...so it's to be expected. 

Umm the bottom link is from 3/31/08, how the hell isnt that current, or reflecting the current market?????

[brettmcd]

Why isn't crude oil and gasoline sold for what it actually costs to produce plus a reasonable profit margin?

Because the government makes more in taxes on a gallon on gasoline than what the oil companies make in profit on a gallon of gas.

I seriously doubt that.

Well you would be wrong.

http://www.nationalledger.com/cgi-bin/artman/exec/view.cgi?archive=1&num=5314

Based upon a $3.00 gallon of gasoline, the average break-down is as follows.

    Gasoline Retailer  $.01 cents per gallon
    Oil Company   $.08 cents per gallon
    Refining   $.29 cents per gallon
    Marketing/Distribution $.32 cents per gallon
    Taxes    $.59 cents per gallon
    Cost of crude   $1.71 per gallon (delivered)

Or here is one from a government web site.

http://www.eia.doe.gov/bookshelf/brochures/gasolinepricesprimer/eia1_2005primerM.html

Refining costs and profits are combined and are equal to taxes at 19% so profit is only part of that 19%.

Here is one last one that is more recent.

http://tonto.eia.doe.gov/oog/info/gdu/gasdiesel.asp

According to the explanation of terms distribution and marketing includes profits, so its again less then taxes.

I haven't checked the bottom link, but all the data from your first link is way out of date, being from 2005.

Not only that, but it's stating the cost of oil itself as a percentage.  However, if a company both acquires the oil AND refines it into gasoline, then the oil portion also goes into their profit.

So your figures are pretty inaccurate, because it's just looking at gasoline, and not oil: the bulk of the costs in everything you cite is the oil itself.

Well if you want to discuss things you should look at all the links, the bottom one is from 3/31/08.   And the topic here is gas, so why would looking at gasoline prices be wrong?

[unbreakable]

Well if you want to discuss things you should look at all the links, the bottom one is from 3/31/08.   And the topic here is gas, so why would looking at gasoline prices be wrong?

It's not wrong, but it's only a small part of the issue.  When you are talking about how much Exxon makes from gas, you obviously have to include how much they are also making from the oil.

So when you try to say the government makes as much (or more) from gas sales the oil companies do, that is, at the least, a lie of omission.

[Blackadar]

Umm the bottom link is from 3/31/08, how the hell isnt that current, or reflecting the current market?????

My bad, I missed that link.  Got the first two.  My apologies there.

However, Exxon (for example) doesn't just own refineries.  They own wells and gas stations.  Therefore, the $2.09 "acquisition cost" would also include profit the drilling division charges the refiining division.  Then there's a profit from the refining division to the retail division.  And then there's a profit to be made at the retail division.  So going back to unbreakables' statement that he doubts that the government makes more in taxes than the companies do in profit on gas, two questions remain open:

A.  Does an integrated distributor make more than $.47 on a gallon of gas?  My guess is that unbreakables' probably correct - however, we don't have any data either way.  However, given Exxon's massive profits, we know they're not hurting for dough.
B.  Does any one division or company within that supply chain make more than $.47/gal?  My guess is probably not - however, we don't have any data either way.

Of course, one could only imagine Exxon's profits if Venezuela hadn't nationalized their oil industry...

[Brendan]

Back when oil was merely 55 bucks a barrel, the republican congress gave them a tax break package totalling 14.5 billion dollars.  Oil is now 100 dollars a barrel, and while brettmcd is paying 3.50 a gallon, Exxon is doing pretty well for itself:

House Democrats have said they plan to target billions of dollars in oil company tax breaks for a quick repeal next year—moves that come partly in response to high summer fuel prices and recent huge industry profit. For example, Exxon Mobil recently reported the second-largest quarterly profit ever for a publicly traded company: $10.49 billion in this year's third quarter, second only to the $10.71 billion Exxon Mobil posted in last year's fourth quarter.

It's a tribute to the republican media machine that they're able to instill such loyalty in their followers that they're willing to rail against their own self interest.

brettmcd, care to estimate how much you've contributed to Lee Raymond's 400 million dollar retirement package?  I really wish my high school career counselor had steered me towards "oil industry chairman".  To be fair, I'm not sure I have what it would take (un)ethically to screw my fellow Americans.

[Blackadar]

Very pertinent to this dicussion:

http://articles.moneycentral.msn.com/Investing/Extra/WhyExxonWontProduceMore.aspx?page=1

[unbreakable]

Very pertinent to this dicussion:

http://articles.moneycentral.msn.com/Investing/Extra/WhyExxonWontProduceMore.aspx?page=1

Makes perfect sense to me.  Why would Exxon want to create a situation where they are spending more money and seeing a smaller return on it?  But the analogy to Starbucks is fantastic.

That's why the fascist economic viewpoint of "privatize everything" can never work.  Because there's a difference between a symbiotic relationship and a parasitic one, and privatizing everything means you have put all the parasites in charge of everything.

Also, most things don't function well on a profit-driven scenario.  The best one I heard was from Michael Moore- how well would a for-profit fire department work out?  If privatizing and profits are such a great all-purpose scenario, why isn't the insurance industry given control of the fire departments, and they can let them know if your house and family are worth saving.

Another problem is what we are seeing in the US now, from deregulation.  These corporations who want to be in charge... they simply aren't smart enough to know what will work out well.  How can anyone think letting a group of people who can't see much farther than the next quarter's profits would have the ability to make positive long term decisions which effect the lives of millions of people?

[Knightshade Dragon]

In other words, producing more barrels just to ease prices for consumers is not part of the company's calculations.

How are we not down at Exxon with pitchforks and torches?  Oh right, we'd need fuel to start the torches...

[unbreakable]

Well that's the thing, though- it shouldn't be up to Exxon to set US energy policy, and yet... that's what it's become.

If Exxon doesn't want to produce more gas, then "the market" should just provide an incentive for other companies to do so.  However... Exxon is likely pigging up all the refineries, since they refuse to reinvest any money into their own business.  Sure, other companies can build refineries, but then they are the ones taking the financial hit, rather than Exxon.

So the whole thing is pretty crafty of Exxon, but obviously not good for Americans.  Which is, again, why having businesses dictate policy never works.  If it did, and self-regulation worked, etc, then how come the government had to literally force auto companies to put seat belts in cars?  Heck, the auto industry refused to even use electric starters, despite how trivially easy it was to do so.  If a good friend of an auto industry executive wouldn't have died cranking his car, we would probably STILL be using the crank.

And then, of course, there is E. Coli, mad cow, etc etc proving why the industry will never self regulation.  Deregulation just allows companies to make short term profit at the expense of everyone else.  Sure it's not even good for their industry, but they don't care.  Deregulation is like a little kid whining about how he wants to eat candy for breakfast, lunch, and dinner... and conservative ideology says somehow it's going to be good for the kid to take away the evil parent who says "no".

[PaulBot]

Pardon me for not being more mature with my comment, but all I can think of saying right now is "Exxon, you suck".

[Knightshade Dragon]

Pardon me for not being more mature with my comment, but all I can think of saying right now is "Exxon, you suck".

I don't think I can argue with your succinct point good sir. 

[Blackadar]

Un-fuckin-believable.

Oil: $118/barrel
Gas > $3.50/gal

Yep, having a Texas oilman in the White House is working well.   

[Brendan]

Your un-American objection to the guiding principle of capitalism has been recorded.  Why, sir, would you deny these corporations their rightfully earned profits?

You're on the list.

You're all on the list!

[Blackadar]

Your un-American objection to the guiding principle of capitalism has been recorded.  Why, sir, would you deny these corporations their rightfully earned profits?

You're on the list.

You're all on the list!

Heh...there's actually a couple of guys in my office who would say that for real.

Of course, they can't respond when it's pointed out that capitalism and ologolpies aren't incongruent.  Furthermore, it ultimately encourages de-facto monopolistic capitalism...which is just a step away from state monopolistic capitalism, which is just another name for communism.  At that point, their heads usually explode. 

[Brendan]

All these polysyllabic words just make me itch for a tax cut.  Maybe two tax cuts.

[Ironrod]

All I know is that my April tank of gas is not going to last until the end of the month. I'm going to have to buy my May tank later this week, and as of yesterday 91 octane was running $3.88 at my preferred station. My May tank is going to cost >$35! That's nuts.

[pr0ner]

Given that I own stock in Chevron/Texaco...

Go baby go!  Make those profits!  Give me money!

[PaulBot]

Given that I own stock in Chevron/Texaco...

Go baby go!  Make those profits!  Give me money!

SHOOT HIM

[Brendan]

Can he be rendered into a couple gallons of biodiesel?

[CeeKay]

Can he be rendered into a couple gallons of biodiesel?

we could always figure out a way to turn him into a human coppertop...

[pr0ner]

You all could just buy some Chevron/Texaco (or ExxonMobil...) stock, you know, instead of making snide comments. 

[CeeKay]

You all could just buy some Chevron/Texaco (or ExxonMobil...) stock, you know, instead of making snide comments. 

where's the fun in that?

[PaulBot]

You all could just buy some Chevron/Texaco (or ExxonMobil...) stock, you know, instead of making snide comments. 

You're assuming I have money. I'm broke from having to fill my gas tank.

[Blackadar]

You all could just buy some Chevron/Texaco (or ExxonMobil...) stock, you know, instead of making snide comments. 

I'm sure Average Joe has $10,000 to buy a 100 shares of Exxon.  Oh, wait, he doesn't!  His real income has been declining for years and the only asset he has left - his home - isn't worth as much. 

It's one of those comments made by people who don't know any better.  Try again.

[CeeKay]

sometimes you have to wonder if Blackadar is an unbreakable Alt 

[Blackadar]

sometimes you have to wonder if Blackadar is an unbreakable Alt 

If that universe exists, then you must be Kobra's alt.  If we get sucked into that place, I have a gun with two bullets.  I'll flip ya to see which one of us gets the joy of going first.

[CeeKay]

sometimes you have to wonder if Blackadar is an unbreakable Alt 

If that universe exists, then you must be Kobra's alt.

Lucky for us, I have a gun with two bullets.  I'll flip ya to see which one of us gets the joy of going first.

I always pictured Paulbot as being my Alt 

[Blackadar]

sometimes you have to wonder if Blackadar is an unbreakable Alt 

If that universe exists, then you must be Kobra's alt.

Lucky for us, I have a gun with two bullets.  I'll flip ya to see which one of us gets the joy of going first.

I always pictured Paulbot as being my Alt 

Only in your wet dreams!

[pr0ner]

You all could just buy some Chevron/Texaco (or ExxonMobil...) stock, you know, instead of making snide comments. 

I'm sure Average Joe has $10,000 to buy a 100 shares of Exxon.  Oh, wait, he doesn't!  His real income has been declining for years and the only asset he has left - his home - isn't worth as much. 

It's one of those comments made by people who don't know any better.  Try again.

Seriously, Blackadar?  That last statement was uncalled for.

[CeeKay]

sometimes you have to wonder if Blackadar is an unbreakable Alt 

If that universe exists, then you must be Kobra's alt.

Lucky for us, I have a gun with two bullets.  I'll flip ya to see which one of us gets the joy of going first.

I always pictured Paulbot as being my Alt 

Only in your wet dreams!

my oil filled wet dreams!

[Blackadar]

my oil filled wet dreams!

Well, that explains your 12,000 posts.  You've just been trying to get his attention! 

[pr0ner]

By the way, you can insult me then ignore me when I call you out on it?  Real classy, Blackadar.  Real classy.

[PaulBot]

sometimes you have to wonder if Blackadar is an unbreakable Alt 

If that universe exists, then you must be Kobra's alt.

Lucky for us, I have a gun with two bullets.  I'll flip ya to see which one of us gets the joy of going first.

I always pictured Paulbot as being my Alt 

Hmmm.... should I feel honored or insulted?