Thread: Gas Prices...
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sammyg2 sammyg2 is offline
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WARNING: Major rant ahead......

The price you pay for gasoline (in the United States) is the best deal you will ever get. It is cheaper than bottled water at the 7-11 for crissake! It is cheaper now than ever before if you factor in inflation.

As far as the north slope is concerned, crude oil is a commodity. The price is set by speculators who use the laws of supply and demand. It does not matter where the oil goes. If it is produced and for sale, it adds to supply thus lowering the price it demands. The Alaskan north slope does not produce enough oil to completely supply North America and never will.

Check out the percentage of taxes you pay on every gallon of gas.
Check out the wholesale price of gasoline.

Never mind, I will do it for you:

At $1.16 a gallon, the oil company that is producing it is losing money on every gallon.

The wholesale price of that gallon is going to be around 68 cents in texas.
Taxes make up around 45 cents in California, not sure about Texas. The distributor (pipeline and or trucking) takes about 1 to 3% depending how far it has to be moved.
The dealer has to make at least 10% to stay in business. How many small business' can operate at a 10% profit level? not many.

The company owned stations pay labor, mortgages, operating taxes and expenses, etc. At 10% they are barely breaking even.
Some stations try to make a little bit on many gallons sold. Some try to make a more on less gallons. If it is so profitable to be in the gas station business why don't we all get into it? You make it sound like it's easy to make a small fortune by selling gas. The only time that's true is if you start with a large fortune.

The crude price is around $30 a bbl for light sweet crude (42 gal), so that works out to be 71 1/2 cents a gallon. On top of that there are operating expenses (OPEX) of around $2.50 to $3 a barrel. That's the cost to turn oil into gas.

Some refineries can operate using a little less expensive stuff (heavy sour), but that makes the operating expenses go up, adversely effecting the bottom line unless the discount is large (which it isn't).

The big bad oil company is paying well over $30 a barrel to make gasoline and selling it to you for $28. Man, they are really ripping you off.

last year when the gas prices were up around $1.75 the big bad oil companies were making around 3% profit. Those B*stards!

This year they are lucky if they break even and they are still the bad guys.

Please do some research before bad mouthing a business sector. oil companies would more than double their profits if they just stopped refining and put all their money in T-bills.

PS, I expect next year the refining business to get back to where it is profitable (around 1.5% return on investment) so the prices will be higher. If crude stays the same, you will be paying alot more than $1.16 (and rightfully so).

If you doubt these facts, check out Tesoro (TSO) or Valero (VLO) or even Exxon-Mobil (XOM).

BTW, Valero is the #2 refining and marketing company in North America (2 million bbls per day) and is only keeping their head above water because they have refineries in California and Canada which are still profitable enough to barely make up for the losses in the gulf Coast and East coast region.

I hate threads where people complain about the price of gas.
I wish everything were so cheap. If Porsches were this much of a bargain you could buy a new Carrera for the price of a Hyundai.
Old 09-30-2002, 10:55 AM
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