It’s about time we got back in the export business.
Gas prices seem to have dropped. Diesel however........
It is a commodity that is easily transported. Thus, the price is influenced by the global market. Producers will sell to whoever will pay the highest price. Thus when gasoline is high overseas, they will sell into that market to maximize their profits. The good news is that gasoline prices are coming down and hopefully the trend will continue.
The area where we need more production is diesel. When the price of diesel comes down, it has a much larger impact to the overall market as much of our transportation of costs is tied to the cost of diesel.
“And our prices are at nearly all-time highs.....”
I suspect you’re thinking that if we restrict gas exports that the price of gas will fall. Let’s suppose that the government decides to lower domestic gasoline prices by doing that. Go to this link to compare world-wide gas prices with taxes:
http://hosted.ap.org/dynamic/files/specials/interactives/_business/gallon_gas/index.html?SITE=ILBLO&SECTION=HOME
What you’ll notice is that the price of gas without taxes is pretty close except in Russia, China and India.
If you go to this link: http://business.whatitcosts.com/refine-oil-pg3.htm
You’ll see…
• 74% - Cost of the crude oil
• 11% - Taxes
• 10% - Refining costs
• 5% - Distribution and marketing
So, 74% of the cost of a gallon of gas is made up from the cost of buying crude oil. So, the idea of forcing oil companies to keep gas here rather then exporting it comes down to them eating some of the costs above. The paragraph below is from the article on costs. It says the oil company profit per gallon is already down. This may sound conter-intuitive to a gas buyer, but we WANT the company to make a proft as that is their motive for supplying the gas.
“As of 1999, for every gallon of gasoline refined from crude oil, U.S. oil refiners made an average profit of 22.8 cents. By 2004, the profits jumped to 40.8 cents per gallon of gasoline refined. In the specialized California market where the gasoline must conform to the requirements of the California Air Resources Board, refinery margins were even higher. In fact, this helped Exxon, the largest company, report a profit (as of February 2008) of $40.6 billion. Nevertheless, one financial tracking institution reported that the profit-margins have now dropped to about 29.6 cents a gallon or around 60 percent lower than a year ago.”
????
That number is very deceptive. It is only counting finished motor gasoline and is not counting the gasoline blending components that are most of our imports. We blend in multiple components to meet our different gasoline specifications. If you count the total of imports that goes to the gasoline tanks in our cars, we import over 240,000 barrels per day more than we export.
Thanks. NOW I know why oil is up but prices have been drifting down.
Since the beginning of Oct oil has gone from around $80 a barrel to $100 and yet gas around here has gone from around $3.50 to $3.15 a gallon. Couldn’t figure out why. Well, from my novice point of view at least :-)
I had been confused over the price of oil going up recently, but gas has been steadily coming down for most of the year. It was pushing close to $4ga, but now can be found under $3
Gas prices in Greenville, SC, area are coming down. Actually started going down from $3.04/gal the day before Thanksgiving. Now we’re in the $2.85 range.
All that notwithstanding, if we’re awash in petroleum and likely to remain so for a while tell me why alternative energy usage now is necessary.
I was in San Francisco a couple of years ago and passed one of those busses that run on overhead electricity. A sign on the vehicle said the bus was reducing SF’s carbon footprint or some such. Do those Marxist walking dead out there on the left coast really believe the fossil fuel power plant necessary to produce the power that runs the busses is carbon footprint neutral—let alone negative?
No they’re not. They’re about a dollar less now than at their all time high but I wonder why we’re still importing Saudi oil if we can thumb our noses at them.