Posted on 11/19/2015 1:25:17 PM PST by thackney
Gasoline is a commodity, just as is crude oil, diesel, kerosene, etc.
The market demands for each do not all move together equally. Some larger general trends will be the similar, but not exact. Month to month can vary a lot.
Keep in mind, these numbers are not actual cost, but price differences.
The Price of the crude oil.
Price adder for the Wholesale Gasoline.
Price adder for the Retail Gasoline.
Price adder for the taxes at retail sale.
If the market is competitive, profit margins at that stage will be smaller.
If crude stocks are higher and gasoline stocks are lower the margins tend to move from one to the other.
At the same time diesel, kerosene, heating fuel, petroleum coke, naptha, etc all have differing demands that do not move equally. Sometimes the refinery makes more of their profit in gasoline, later in diesel, etc.
Does your electric bill move precisely with the price of coal, natural gas?
Again, look at the chart in post #15. Gasoline didn’t rise as much as oil (percentage) so why do you expect to fall by the same percentage?
Yeah, but it's not the nineties anymore, corporate taxes are higher, wages are higher, and EPA regulations impose a higher cost than they did then. Obamacare figures in, too.
Time to fill up the SPR!
About half the cost of gas/diesel is incurred after it is extracted.
For those of us who know nothing about crude oil grades and what they mean, would that oil be selling for less than $20 because it's difficult/more costly to refine into gasoline and other petroleum based products?
Buck 69 in South Carolina. Maybe the lefty taxes are to high.
Different grades would include sour, containing more sulfur, which cost more processing to remove.
Also made up of too many components that are too light or too heavy to separate into the most valuable fuels of gasoline, diesel or kerosene.
Those that are too heavy can have extra processing to crack those long change molecules into lighter ones. But it cost more and 100% of that does not become a transportation fuel.
Thanks for the explanation. Had a feeling the “grade” of crude had something to do with it, never knew why.
By Grade do you mean the API gravity? Thinner versus thicker?
That is part of the qualities that vary the value.
This is one of those areas I have literally zero knowledge in which is why I'm asking what are likely very basic/rudimentary questions.
Light oil is thinner, has a higher API gravity (a measurement of viscosity). It contains more smaller molecules of hydrocarbons. Too light, like propane, and it cannot be used for gasoline, diesel etc.
Heavy oil is thicker. It is literally heavier. It weighs more per barrel than light oil. It has more larger hydrocarbon molecules. Ultra heavy oil is heavier than water. Refineries can break (crack) the larger molecules into smaller ones, but that cost energy (money).
All are a blend of many different sizes of hydrocarbon. API gravity and sulfur are the most common measurement of oil qualities.
I learned something new today, thanks!
I share this so folks understand when the media quotes the price of oil, that price is West Texas Intermediate, delivered to Cushing, OK, and delivered next month.
Time, location and qualities can double or halve the price of oil.
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