If you make a relation of the price of a barrel of crude oil (+-) $25 to $2 a gallon gasoline in 2002 and, $125 a barrel of crude oil now, one gallon gasoline would cost $10.
Am I wrong?
If a barrel oil (42 US gal) costs 126$. That means 3$ a gallon of crude, if you add the procesing, transport etc. it wouldn't be a good business to sell it for 4$
a 55 gallon drum of crude produces 44 gallons of gasoline
the price we pay is not just the cost of crude it is also profit, refining cost, delivery, advertising, taxes. all of those cost did not go up only the portion for the actual raw product therefor the finished delivered price only doubled even though one part of the production cost went up 5 times.
oil company profits have skyrocketed because they actually own part of the crude that they sell to them-self to refine. they right off the expense of buying crude from them-selves.
nice trick ain't' it?
that refining of crude oil also results in by-products that are then also sold nothing is wasted and when you add in the fact that they own or are in joint ventures with the governments who own the oil their actual cost per barrel is not the market price. much of the oil that we use is from the US and the oil companies have leases and contracts for that oil they pump that pay no where near the world market prices. most of those contracts and leases have been in place for decades.
May 22nd, 2008 at 9:44 pm
I would guess different refining techniques but I don't know for certain.
References :
May 22nd, 2008 at 9:48 pm
I see your logic, but the price of gas doesn't follow the price of oil in such a linear fashion. Part of the price of gas is the process that takes it from crude oil to the gas you put in your car.
Look at it this way. You're making a cake with a box mix. Let's just say it only calls for eggs and water. The mix cost you $1 and lets say the one egg costs $.25. Meaning you'd make a cake for $1.25. If the egg all the sudden cost $.50, the cake doesn't cost $2.50, it only costs $1.50.
Strange analogy, I know. Just was the first example I could come up with.
References :
May 22nd, 2008 at 9:54 pm
a 55 gallon drum of crude produces 44 gallons of gasoline
the price we pay is not just the cost of crude it is also profit, refining cost, delivery, advertising, taxes. all of those cost did not go up only the portion for the actual raw product therefor the finished delivered price only doubled even though one part of the production cost went up 5 times.
oil company profits have skyrocketed because they actually own part of the crude that they sell to them-self to refine. they right off the expense of buying crude from them-selves.
nice trick ain't' it?
that refining of crude oil also results in by-products that are then also sold nothing is wasted and when you add in the fact that they own or are in joint ventures with the governments who own the oil their actual cost per barrel is not the market price. much of the oil that we use is from the US and the oil companies have leases and contracts for that oil they pump that pay no where near the world market prices. most of those contracts and leases have been in place for decades.
References :
blackcobra487 - nice analogy…………..very nice