Posted on 05/19/2008 9:55:47 AM PDT by kellynla
With fill-ups routinely costing $60 or more, cost-conscious drivers naturally look for someone to blame. And just as naturally, politicians are happy to blame others.
Enter "Big Oil," the demagogues' favorite villain. Gas prices soaring? It's because oil companies want "excess profits," as Barack Obama puts it. Right? Wrong. The truth is more complicated.
Let's look to California, driving capital of the world. Officials there watch gas prices carefully. During March and April, a state analysis found "distribution costs, marketing costs and profits" made up about 10 cents of the cost of a gallon of gasoline, which ranged from $3.46 to $3.89. Notice that dime is less than 3 percent of the total retail cost, and profits account for only part of it. So those "excess profits" are actually well below 3 percent of retail costs.
Of course, that's little comfort to tapped-out drivers. And the big oil companies are certainly making big money — Exxon Mobil alone earned $40.6 billion last year. But such profits follow naturally when a company sells a product so many people want to buy. Some recent history offers us a bit of perspective.
In 1998, a recession in Asia created an oil glut. Prices plunged to historic lows (near $10 a barrel), and American drivers reaped the benefits, with gas dipping below $1 per gallon. So how did Exxon fare in those days of low prices?
According to Forbes magazine, Exxon earned more in profits than any other American company in 1998. Sales increased 3 percent over 1997 and profits jumped 12.6 percent, to $8.4 billion. Again, remember: Oil was remarkably cheap that year, yet Exxon earned double-digit profits. Few complained then.
(Excerpt) Read more at washingtontimes.com ...
ping
Drill in the US, drill offshore, drill (and scoop) in Canada and drill in Mexico or shut the border.
The US Congress...for the Polar Bears, not the people...
The top 3 news stories on my local Fox affiliate this morning were:
1. Americans are suffering terribly due to the price of gas and that price is set to rise to $4 a gallon. (Yes, the word “suffering” was used several times in this 30 second spot.)
2. The top box office movies this weekend were X, X and X. When I totaled the revenues it was near $100M. (Amazing, I thought the price of gas was making us suffer!)
3. China has declared 2:28 PM today to be a time of mourning for those that were killed by thet earthquakes. Many Chinese are without food and water. (Now, that is suffering.)
There are 1400 exploratory wells being drilled in the USA right now.
We need some kind of call in to your rep strategy, like was done about Immigration. We need to make the phone lines melt.
We're suppose to swallow this BS? Who exactly did this "analysis"? Who are they associated with? Who do they work for? So, based upon this article, we are to believe that only 10 cents out of $3.899 is from the total cost of distribution, marketing, and profits!!!!! And I have beach front property in Arizona I want to sell with a beautiful view of the Atlantic Ocean. Of course, that's little comfort to tapped-out drivers. And the big oil companies are certainly making big money — Exxon Mobil alone earned $40.6 billion last year. But such profits follow naturally when a company sells a product so many people want to buy.
Yeah, this is just a product of convenience for people, and not something we need to buy. We could all just as easily just stop buying this product if we so choose, just as we could stop buying coffee or soda. This article is full of BS. I'm going to have to start wearing boots when I log onto FR and read threads like this.
I’m forming the Cheap Energy Now party. My emblem will be a derrick and bulldozer.
I pity the eco-nut who lays down in front of the Cheap Energy Now party march.
So EXXON did well during the low price two months in 1998, huh? Funny, the gas is a bargain at any price crowd told me that like 90 percent of the oil workers were basically forced to panhandle because of cheap prices.
Is that your own opinion?
If so, would you show us a different study about the subject?
Every driver who is fed up with paying $70 for a fillup at the gas pump ought to direct his/her fury at their Congressman for caving to the inconsequential numbers of voters who belong to the enviro-nazi cult in the US. Why can such a small number of loudmouths dictate the energy policy of the nation?
ANWAR belongs to all of us and we need our oil. If that rotten Bill Clinton had not vetoed drilling in the ‘90s, we would be using that extra 1,000,000 barrels right now.
Why do the brain dead Republicans not confront the Dems every day with the fact that they are responsible for the pain at the pump for the middle class they claim to be championing?
bump
What is bad for the people is good for the ‘Rats who just last week voted to filibuster an amendment that would have opened ANWR and some of the Alaskan coast for drilling.
Here is a comprehensive study that you may want to read. This link is the executive summary:
I'm talking about the claim that "10c per gallon covers distribution and profit" is BS.
It appears we may first have to drill some holes in our elected, both parties, before we can proceed to take advantage of OUR nations energy capabilities.
Stupid analysts.
Go to France or any where in Europe 2004 -08 prices are only up 10-20% in Euro’s.
Problem is the Dollar is worth POOP these days, takes 2X dollars to buy the same gallon.
We are all going to be driving Little 2 cylinder metro cars in 5 years with a little more social/financial engineering from the liberals
Here is a comparison of net income between the two groups over a longer period of time:
http://www.eia.doe.gov/emeu/perfpro/fig03.htm
Here is the net income of FRS companies in dollars per barrel of product over a long period of time. The average is less than $2.00 per barrel, i.e. less than 4.75 cents per gallon.
For true perspective of why oil is so expensive, begin Googling currency debasement and type in this:
this time is different & harvard
The very first search listing describes several hundred years of economic history. Bottom line, oil is this expensive because our monetary policy has been to debase our currency. Debasing/devaluaing currency is a remedy for governments to indirectly tax it’s citizens because of bad monetary policy and wasteful spending. Speculation is a part of expensive oil but a smaller portion, it was $17 a barrel when price was $110 or roughly 15%. It simply takes more dollars (roughly double in five years) to purchase the same barrel of oil.
Your correct.
At least, it's not unreasonable.
So, why was SoldierDad insisting it was BS ?
Just wonderin'
What boggles my mind is that the Dems are so stupid that they think that an extra 70,000 barrels per day by suspending Strategic Petroleum Reserve deposits will help lower prices, but an extra million barrels per day from a tiny corner ANWR won’t help lower prices.
There is plenty of oil; just not enough refineries. The last US refinery was built 30 years ago!
Global whining by the demonrats has stopped this nation in its tracks with new drilling and refineries “frozen” by the demonrats.
See my tag line.
It is MY own opinion, and I’ve yet to see any actual independent study provided which demonstrably shows that distribution, marketing, and profits makes up only 10 cents of every gallon of fuel based on the price at the pump. Where does the other $3.79 per gallon (approximate) go? A recent market analyst on one of the 24 hour news programs provided information which suggests that up to 60% of the cost for a barrel of crude is based on market speculation, with the rest being from supply and demand issues. I’m guessing the issue is so clouded and confused that no one really knows why the price is as high as it currently is.
One reason I was confused is your post had your remarks in italics, as if you were quoting someone.
Oil demand worldwide has skyrocketed, that’s demonstrated fact. And what else is China going to do with all the dollar bills Wal*Mart ships over there than buying oil, eh?
At current prices, crude oil is about $2.85 per gallon. That doesn’t leave much left to pay for refining & distribution in a $3.89 gallon of gasoline, especially when around 25% of Exxon-Mobil’s GROSS revenue goes to pay all kinds of taxes to various governments worldwide, including US taxes on its non-US operations.
Yeah, I’ve seen this already. So? Where is this information coming from? Who provides it? How can anyone judge it’s veracity? For example, if I calculate 8 percent of $3.859 (approximately the price per gallon of fuel at the least expensive station nearest me) I get 30+ cents per gallon - That’s 3x the 10 cents this article claims for distribution, marketing, and profits combined, and your post is suggesting this is for distribution and marketing alone.
Yeah, I forgot to use </> to end the italics. Sorry. Once you hit post it’s too late.
$2.85 a gallon based upon what? What’s the cost per barrel at the source? How much does it cost to pump each barrel from the ground? How much for transportation costs, etc? There’s a whole lot that’s not being said about why the price is as high as it is. I’d like to see some independent breakdowns for the cost for every aspect of what goes into getting that one gallon to the pump - and I really mean independent. I don’t trust analysis coming from the industry itself.
“Yeah, I’ve seen this already. So? Where is this information coming from? Who provides it?”
“yeah?”
you’re real big with the “thank you’s” ...
if you had bothered to check the link I provided you,
you would know that the info comes from the Energy Information Administration which is part of the Department of Energy...
you’re welcome...
Maybe you could get your son to teach you some manners the next time he is home on leave.
gezzzzzzzzzzzzzzzzzzzzzzzzzzz
“There is plenty of oil; just not enough refineries. The last US refinery was built 30 years ago!”
We all know that its been 30 years since there was a NEW refinery built but as “thackney” will confirm, the oil companies have been expanding the existing refineries over the years which I believe has been equivalent to a new refinery each year but I don’t stand behind that; “thackney” would be able to give you the exact numbers
But we do need to drill more and if we substituted domestic for the foreign oil we import; it would sure be a answer to the existing problem!
Based upon a $120 spot price for a 42-gallon barrel of crude oil, of course. The spot price being what a willing buyer is ready to exchange with a willing seller of a barrel of oil.
It'd be nice if gas stations would start breaking out taxes and fees on gasoline receipts.
Just so you know, information coming from the government (DOE) does not guarantee that it is factual. Do you believe everything that people in the government tell you? Do you have any independent sources with which to verify what the DOE claims?
Nice article, but sadly, only 1% or so of Americans will read it or even hear about it so they can read it.
The question about the reasonableness of oil company profits gets asked so often that the EIA has essentially automated the reply by requiring the largest oil companies operating in the US (FRS companies) to provide more data to the EIA than they provide to their own shareholders.
The EIA agglomerates the data and then publishes it after a delay. Data for 2006 is the most recent available.
Perhaps we are to blame for not getting ourselves motivated to conduct a March on Washington to protest the Government’s actions (Dems and some idiot Republicans like McCain!) to block Drilling everywhere in the USA and along our coasts.
According to this morning’s report of the latest Zogby poll, there are now 52% of the people in the country who are in favor of drilling in ANWR. However, the reporter went on to say that the 48% who want to block drilling are much more vocal so they will continue to get their way.
It is time for us to demand that the Drilling start here now.
RamS
Look, mister...if you can’t be any more polite than you have been,
don’t ask me for information...
gezzzzzzzzzzzzzzzzzzzzzzzzzzzz
Look, mister...if you can’t be any more polite than you have been,
don’t ask me for information...
gezzzzzzzzzzzzzzzzzzzzzzzzzzzz
“You want me to buy the BS?”
and before I leave you to your RUDENESS,
I couldn’t care less whether you “buy the BS”...
I merely posted the article and the information from the EIA...and for my troubles, did I get a “thank you” or “please”....NO, I get more rudeness...
Maybe you can get that Soldier son of yours to teach you some manners while he’s home on leave. LMAO
Good Day!
You are sticking to the company line that suggests that distribution, marketing, and profits together comprise 10 cents of the cost of a gallon of gasoline. My being polite or not being polite does not detract from the fact that this claim is pure BS. You can't even respond to my question regarding how you square the fact that by your own post, at $3.859 for a gallon of gasoline, 30 cents of that price makes up the costs of marketing and distrubution (your post indicates that 8% of the cost of a gallon of fuel goes to marketing and distribution without profits being a part of that). Balls in your court. Either you should back up your claim or bow out.
If you take things this personally, perhaps you should refrain from posting, especially information that is 1) incorrect, and 2) guaranteed to generate comments that might offend you.
You still have not addressed how the article (or you) defends the claim that profits, distribution, and marketing make up approximately 10 cents of the cost of a gallon of gasoline when, by your own post to me, the approximate cost for marketing and distribution for a gallon of fuel at $3.859 is 30 cents. Or, are you just interested in being rude to me for asking for validation of said claims.
So is the pipeline(s) to wND/eMT started yet?
From Alaska?
since my name was mentioned in your post and that of Izzy Dunne (without a ping to me) I’d thought I’d respond so there’s not confusion. First, I don’t trust information that comes from sources that have irons in the fire so to speak. I’m looking for independent confirmation on this claim. Second, a couple of other people posted to me claiming that EIA estimates 8 percent of the cost of a gallon of fuel goes to marketing and distribution. Doing the math that equals 30 cents per gallon, not the 10 cents that this article claims, and this is only for marketing and distribution. So, where do profits fit in? There’s a lot of misinformation out on the issue of the cost of fuel, and until some completely independent source comes out with information I’m skeptical.
Although I don't use this product, since people are starting to use bicycles more, people might be interested in this autoshifting bicycle.
Autoshifting bicycleAlso, I'm keeping an eye on developments in bio-fuel production.
First, the bad news about ethanol. Ethanol fires are evidently harder to control than gasoline fires.
Ethanol fires hard to control 1Hopefully, ways will be developed to make controlling ethanol fires easier.
Ethanol fires hard to control 2
On the brighter side concerning ethanol, there's now evidence that people might get as much, or more, bang per buck for their gas dollars with gas / ethanol mixtures.
Gas-competitive gas / ethanol mixturesAlso, I was surprised by the introduction of a machine (popularly known as a still) for making home-made ethanol.
EFuel100In stark contrast to the 1700 gallons of water required to make one gallon of corn-based ethanol as indicated by the OP, the EFuel100 uses only 170 gallons of water to produce 35 gallons of ethanol In other words, the EFuel100 uses less than 1% (about 0.2%) as much water as corn ethanol, under five gallons, to produce one gallon of ethanol.
But also note that the water used in the EFuel100 process does not take into account the water needed to grow the sugar that is used for this process.
And watch out for fines for violating biofuel regulations.
Fines for violating biofuel regulationsAlso, progress is being made in the development of other non-corn ethanol production technologies as well.
Non-corn ethanolFinally, I've also been hearing good things about biodiesel production but need to find some links.
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