Posted on 05/01/2005 7:51:43 PM PDT by CHARLITE
With gas prices higher than ever, and economists speculating that things are only going to get worse before they get better, it's not surprising that average Americans want to know why saying "fill 'er up" at the pumps these days may result in them being forced to sell a kidney on eBay in order to pay for it.
While several factors come into play, the current price of crude oil, which is now around $50 a barrel, accounts for roughly half of the total cost of gasoline to consumers. About a quarter of the price we pay can be attributed to state and federal taxes, and the remaining 25 percent is split fairly evenly between distribution and refining costs.
It's important to note that the latter 25 percent also includes oil company profits, however, in March of this year the American Petroleum Institute estimated that oil companies currently net approximately 7.2 cents per gallon sold. Since the average gallon of gas goes for $2.24 at the present time, that accounts for only 3.1 percent of the total price at the pumps.
Suffice it to say that those greedy, blood-sucking oil companies that liberals hate so much, aren't screwing us nearly as hard as Uncle Sam is, since he's taking over 8 times more cash out of our pockets than Exxon, every time we shove that nozzle into our gas tanks.
And although taxes really open up our monetary veins when we fill up our cars, nobody is inserting a bigger catheter into them than OPEC. Indeed, the Organization of Petroleum Exporting Countries is clearly putting the wood to us and most other industrialized nations on a regular basis.
First it cuts its oil output, and waits for demand to skyrocket. Then it increases production and sells as much "black gold" as possible... at a premium. Once the forces of supply and demand cause oil prices to drop below a certain, predetermined level, it then cuts its output once more, and the roller coaster ride begins anew.
That entity makes obscene amounts of money by manipulating the ebb and flow of worldwide oil prices, yet, even though OPEC has the ability to greatly influence the global market, its effects on the price of gasoline in this country wouldn't be nearly as profound, if we weren't so dependent upon foreign oil sources. Tell me, who's really to blame for that? Is it Saudi Arabia, Kuwait, Venezuela, or any other major oil producing nation?
No. After all, when did the United States last build an oil refinery, or construct a nuclear power plant, for that matter... a quarter century ago? Hell, we haven't stepped up domestic energy production one bit in all that time, and in fact we've shut down dozens of refineries in recent decades, yet our demand for energy keeps growing by leaps and bounds.
The U.S. Geological Survey (USGS) has assessed that the United States is sitting on as much as 112 billion barrels of recoverable oil. And even if they've overestimated the true amount by, say, 30 percent, we've still got enough oil to meet our energy needs for many years to come, yet the majority of these reserves continue to go untapped. The main reason for this is federal environmental laws, which have effectively made drilling off limits in much of the country (tens of millions of land acres), as well as in most areas off shore.
To put the amount of oil America may have at its disposal in perspective, let's compare our potential reserves to those of Saudi Arabia. The Saudis have approximately 262 billion barrels in their reserves, which is only about 150 percent more than the USGS suggests we have, and they are the number one exporter of oil in the world. We, on the other hand, are the top importer of oil, consuming 3 times as much as we produce every day.
In addition to an inadequate energy infrastructure, state and federal regulations effecting gasoline refinement, which, once again, have been created primarily because of environmental concerns, further limit our production capacity. For instance, as I write this article our existing refineries are forced to produce upwards of 50 different types of gasoline... 50 DIFFERENT TYPES! This seriously hinders their efficiency, and restricts availability in various local markets throughout the country.
Keep in mind that no one is suggesting certain reasonable measures shouldn't be taken to protect our environment from the potential ravages of industry. Clearly that's the responsible thing to do, however, we've taken the whole idea of it to preposterous levels in recent years, and the situation just keeps getting more absurd as time goes on. Think about it... whenever anyone of the conservative political persuasion even suggests doing something productive, like drilling for oil in ANWR and other domestic locations, which are not at high risk of suffering any real harm due to such undertakings, every liberal from Malibu to Manhattan acts as if he wants to poison their children.
Frankly, that's just plain nuts!
The trouble with this country isn't that we don't have the technology or the resources to free ourselves from the grip of foreign oil dependency. We do. Our problem is that, for the past 25 years or more, we've let a bunch of whinny, let's-all-hold-hands-and-sing-kumbyah environmentalists undermine our viability. We've allowed these tree-hugging peons to set us back economically, because we haven't had the guts to confront them and their representatives in public office, head on, and expose their political correctness for the dangerous lunacy that it is.
What was once the land of independence has become a land of increasing dependency, and no turban-wearing opportunist from another country is responsible for that. It's U.S. citizens who keep voting into positions of governmental authority, overly protective mother figures, who's only solution to our energy problems is to suggest that we all drive Yugos from now on.
So the next time you're at the pumps, getting agitated over the prospect of breaking another 50 dollar bill, ask yourself who's chiefly to blame for the outrageous gas prices you're paying. If your answer is greedy Haliburton executives, the taxman, or evil foreign oil merchants, you might want to avoid inhaling so many gas fumes in the future. While it's true that none of those folks are doing you any favors, the most ominous threat to your wallet is a bunch of homegrown, radical environmentalists, who would rather save some endangered species of dung beetle than the United States of America.
http://www.usgs.gov
http://api-ec.api.org/frontpage.cfm
http://www.eia.doe.gov/emeu/cabs/saudi.html
Edward L. Daley is the owner of the Daley Times-Post http://www.times-post.com
Blame the environazis.
Got it in one. There's LOTS of oil in un-tapped areas---especially offshore of Calfornia and the Atlantic coast of Florida---but they are "off-limits" to drilling---despite the fact that safety methods for platform drilling are orders of magnitude better than when the offshore wells along the Texas, Louisiana, Mississippi, Alabama and Florida Gulf Coasts were drilled (and where drilling still goes on today).
Not enough oil. And it doesn't matter. Even if we drilled here it would still go at "market rate" since it's a commodity.
Good one to stuff in the libs pocket. Taxes are actually higher than stated in the article. They post the actual taxes on the pump but not all the hidden taxes. I'll bet it comes closer to 50%
Bob Brinker said on "Money Talks" last night that they WILL drill Anwar.
I guess Jeb is an environazi then, because he's the main guy standing in the way of drilling off Fla.
IMHO the author is a litttle misleading, because I'm pretty sure he includes oil shale in his estimate of US reserves. As has been stated on many FR, the breakeven cost to develop shale is still way, way above the current price of oil. And the process used to exctract oil from shale is so environmentally damaging as to give even the most ardent-prodevelopment conservative considerable pause--in a nutshell,, you end up with 50% more waste rock than you started with.
For shale to be even remotely practical we're going to have to find an extraction process that's both cleaner and cheaper than the way it's done now.
There is one way to look at this: we are using other countries' oil while pretty much retaining ours. To me, this is very smart and strategic. Although it is doubtful we will run out of oil from the Middle East in the forseeable future, I would rather have the oil stores than some other country.
My wife has been in the oil industry since 1969. She has been pointing out many of the points in this article. It is a shame that so few understand the petroleum industry. When she took me on a tour of her Texaco World offices in Harrison, NY; there was an entire floor filled with tax accountants, trying to abide by Federal laws.... The list goes on. Ad neauseum.
http://economist.com/world/na/displayStory.cfm?story_id=3914915
Worth reading, as is the entire issue featuring oil.
transportation costs would be lower.
The thing is, a company pumps oil out of Alaska. The price of crude worldwide is, let's say, $50 per barrel. That company is not going to turn around and say, "Hey, it's American oil, let's sell it to the U.S. for $35 per barrel." They are going to put it on the global market and get as high a price for it as they can, because that's what they're in business to do.
While several factors come into play, the current price of crude oil, which is now around $50 a barrel ...While we're on this subject, let's be clear about this: THIS the price for light, sweet, easy-to-refine crude ...
'Sour' crude goes for than sweet - here's an article excerpt from late last year (sorry, couldn't find something from this year on short notice!)
Opening excerpt:
US refiners get rid of sour oilby Steve Everly
17-11-04 In a year that has seen oil prices reach record highs, it may seem odd that producers have been offering discounts to get rid of the stuff. But that has been happening with crude oil known as "heavy sour," which is different from the "light sweet crude" whose per-barrel price is most often quoted as the price of oil.
In fact, more than three-fourths of US refinery capacity can process heavy sour, which typically sells for a few dollars less than light sweet crude because it is not as easily refined.
And this year, as Persian Gulf producers have flooded the market with additional supplies of the heavier sour crude, the sweet and sour price gap has grown even wider, reaching $ 17 to $ 18 the last week of October.
It looks to me as if this is more a matter of regional economic power that is keeping us from developing a more self-sufficient energy policy. New ideas like wind and ethanol shift the energy economy to midwestern and mountain states. I think that is why NE senators block them, really.
I think we're edging toward a better energy policy, but it'll have to be one that make economic sense.
For the record, I recently rode in a hybrid car. It was an outstanding ride, but the dumbest looking vehicle I have ever seen in my life. What we need is more ideas like the hybrid better executed.
I don't know about NE senators blocking energy policy because energy sucks a lot of money out of the economies in the NE states, i.e. winter and transportation of goods.
But it would increase supply which is the main factor in prices.
There would have to be a whole lot of it to increase supply enough to lower prices on the world market. From what I've read, there isn't another Saudi-sized strike waiting up there. And, too, why would the oil companies flood the market with a commodity in quantities that would lower the price of their product?
It will be on the global market, but when it is purchased the transportation costs will be lower because it is domestic.
Per how stuff works :::
Distribution and marketing - Crude oil is transported to refineries, and gasoline is shipped from the refineries to distribution points and then to gas stations. The price of transportation is passed along to the consumer. Marketing the brand of the oil company is also added into the cost of the gasoline you buy. Together, these two factors account for about 13 percent of the price of gasoline.
So, you think the oil companies are evil? BTW, I've seen you're other posts.
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