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#1 gm_general

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Posted 23 June 2022 - 11:07 PM

I did not know much about this subject but looking into it led to more questions. It was generally agreed oil is about 60% of the cost of a gallon of gas, and a barrel of oil produces 19-20 gallons of gas. At $105 a barrel that works out to just over $5 of oil per gallon of gas. But wait, in Tennessee (cheapest gas) at $4.56 a gallon 60% of that is $2.74. How is this accomplished? Hedging? Also about 13 years ago oil was about $150 a barrel and gas was cheaper - better hedging?

 



#2 fib_1618

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Posted 23 June 2022 - 11:55 PM

Below is the breakdown of a 42 gallon barrel of crude oil. The reader can now realize why consumer prices are skyrocketing along a broad front.

 

Much of the differences in consumer costs have to do with transportation costs of each source (including their production costs) either by truck or pipeline from the gulf coast, any state regulations and taxes (environmental or otherwise), and then you have the profit margins of each individual service station to add into the mix just to keep their pumps running. There's also the costs of replacing old fuel tanks and pumps as well, while the state of California has the highest refinery costs due to their environmental designer gas (which helps some but doesn't fully solve the problem due to their topographies). Don't know if that was what you were looking for, but it's things like this that make up the final price you pay at the pump across the United States.

 

Fib

 

oilbarrel062322.png


Edited by fib_1618, 23 June 2022 - 11:57 PM.

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#3 gm_general

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Posted 24 June 2022 - 09:01 AM

I get why gas varies so much between states, what I wondered is why if the oil cost in that gallon is over $5 why at least in the US the cost per gallon does not reflect that. Do we get a huge discount or the oil companies are using hedging equities to dampen huge price changes?



#4 gm_general

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Posted 24 June 2022 - 12:34 PM

I think I found the simple answer - other products are derived from each 42 gallon barrel which are also sold

 

"Petroleum refineries in the United States produce about 19 to 20 gallons of motor gasoline and 11 to 12 gallons of ultra-low sulfur distillate fuel oil (most of which is sold as diesel fuel and in several states as heating oil) from one 42-gallon barrel of crude oil."

 

https://www.eia.gov/tools/faqs/faq.php?id=327&t=9#:~:text=Petroleum%20refineries%20in%20the%20United,gallon%20barrel%20of%20crude%20oil.

 

But still why $150 a barrel yielded lower prices than now?



#5 fib_1618

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Posted 24 June 2022 - 02:04 PM

I think I found the simple answer - other products are derived from each 42 gallon barrel which are also sold

 

"Petroleum refineries in the United States produce about 19 to 20 gallons of motor gasoline and 11 to 12 gallons of ultra-low sulfur distillate fuel oil (most of which is sold as diesel fuel and in several states as heating oil) from one 42-gallon barrel of crude oil."

 

https://www.eia.gov/tools/faqs/faq.php?id=327&t=9#:~:text=Petroleum%20refineries%20in%20the%20United,gallon%20barrel%20of%20crude%20oil.

 

But still why $150 a barrel yielded lower prices than now?

 

Another idea is that the current administration has forced a full stop for drilling of oil in Alaska and the Gulf of Mexico (no less imports from Canada)...back then, leases AND permissions to drill were still being given. Goes under the umbrella of transportation costs, no less, increases in regulations and fuel related taxes since that time. In any event, bring back permissions to drill domestically, and the price of crude oil would immediately shave off $30 to $35 a barrel in one trading session as a start.

 

Fib


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#6 gm_general

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Posted 26 June 2022 - 11:40 AM

Another useful link about oil derived products

 

https://www.energy.g...ng-whole-barrel



#7 Rich C

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Posted 26 June 2022 - 12:46 PM

The Bakken Shale in ND is open for drilling, but there is little new drilling up there.  I found this article by Christian Science Monitor, and I find it to be very well balanced.  They present the need to drill as well as the negative aspects of the oil industry.  One of the biggest problems in ND is the inability to hire people who are skilled in drilling.  Drilling is dangerous if you don't know what you are doing.  I grew up on an oil field and many of Dad's friends were missing fingers and/or toes.  Heavy things can fall on you, and there is high pressure at the well head.

 

If you are on either side of the drilling debate, you will find some support for your position. 

 

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#8 pdx5

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Posted 26 June 2022 - 09:00 PM

No one will invest in drilling for oil with Biden at the helm controlled by environmental wackos.
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#9 linrom1

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Posted 26 June 2022 - 11:52 PM

No one will invest in drilling for oil with Biden at the helm controlled by environmental wackos.

controlled by environmental wackos?

 

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#10 gm_general

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Posted 27 June 2022 - 06:36 AM

Interesting video

 

https://www.youtube....h?v=dCMwNVNxAdY