Americans today drive twice as many miles as they did in the 1980s, and in many cases they use heavier vehicles as well – SUVs, heavy trucks, and family vans. We consume 20 million barrels of oil a day, of which 45% is converted into gasoline. 178 million gallons of gasoline are consumed each day.
So who decides how much those gallons of gas cost? Why are places fifty cents a gallon higher than other places? And how do we predict what gas will cost us in a month?
Taxes, Taxes, Taxes
You might be surprised to find that a huge portion of your gas prices comes from what your state has to offer. and you have also decided to govern your local governments with fair expenditure. 13% of every gallon goes to the government, more than half of what your state government averages. Deduct a lot of what you pay for gas, and you’ll see what you’re really paying for if the government keeps its hands out of your pockets.
If the profit will be flipped up front, you can see that taxes are actually a bigger part of your gas price than the company’s oil profit.
The variation in state taxes is the first reason for the different pricing in different regions of the country.
Processing and refining losses
This is one area where you can heavily criticize the oil companies. Costs always go up when supply is short, and we don’t have enough refineries in America today. Worse, what we have are thirty year olds or more, and they are in need upgrading If the oil companies had worked for this five or six years, today we could see lower prices from major refinery processes. a> and less finite subtleties.
28% of your gas costs come from the refining process, where crude oil is converted into gasoline, diesel fuel, and other petroleum products from kerosene to “. Short of building new refinements or upgrading our already loaded, this cost cannot be cut.
Really bad news: this ratio has gone way, just in three years. Just in 2004, when gas was cheap, this proportion was only 19%. Something is going on to cause our smelter costs to rise so quickly, and perhaps this is what needs to be addressed as soon as possible.
Transportation and Marketing Costs
It takes diesel fuel and fuel to transport your gasoline from the refinery to the tanks and from the reservoirs to the gas stations. The truckers who fuel your ship are considered among the best in the industry, because they should be among the best; An accident with any semi-public truck is bad, but one involving containers of fuel can be disastrous. You can spend at least 5% of your income on transportation and marketing.
If the cost of transportation and marketing is more than 5%, it comes directly from the profits of the oil companies.
Oleo Profits Company
There are two different types of benefits, in the end, for your gas cylinder: the oil companies and the end distributor. Oil companies make more than 8% profit on your gas, from which all their transportation and marketing expenses are paid, and the gas station typically makes just a penny.
That’s all great, until it’s taken care of. When you invest a large amount of money in a stock, you can certainly expect better than an 8% return on it. Even simple CDs return to banks between 5 and 6%, just 2% below the oil company’s profit.
In addition, oil companies have many other expenses that they must pay: standard business expenses such as office rent and employee salaries, advertising, and yes, the inevitable big business government lobby.
The most useful oil companies are the Supermajors, which have the entire process, from oil fields to refining distributors; from which they can receive all the profit. Less profitable companies only own oil distributors, or only buy oil by the barrel for delivery. There are twelve ways to cut the crust.
But here’s what you don’t know: the largest oil companies are mainly or wholly owned by foreign companies: Citgo is wholly owned by Venezuela, BP by a British company, Shell by a Dutch conglomerate. The only major oil companies wholly or primarily owned by American companies are Exxon, Chevron and Conoco. In addition, of the ten largest oil suppliers, all but two are owned by foreign governments or companies: Mexico, Saudi Arabia, and Venezuela. The two who own the American oil companies only hold a pint of razor oil. Most American companies focus on energy as a whole, not just oil.
Additionally, American oil companies only receive part of the oil from American oil fields; if foreign supplies are made more expensive by the foreign owners of the oil fields (like OPEC), their costs go up. With only 8% profit margin, in turn, they must pass the costs on to American consumers. If you want to blame someone for higher gas prices, maybe blame Saudi Arabia and Venezuela — not that you care.
In reality, a wide variety of pressures force our prices at the pumps: shortage of crude oil, shortage of oil production in the Middle East due to wars, lack of sufficient American supplies, and problems with countries like Venezuela and Mexico. A significant reason for the higher prices is increasing demand, especially from Asia, where car ownership has skyrocketed and power needs are increasing day by day. It is a basic rule of economics: if the demand for a small supply goes up, the price will also go up.
Ultimately, the surrounding environmental and political issues all point in the same direction as our economic issues – we need cheaper alternatives and we need them now. It would be much richer for all the problems at hand if environmentalists and oil companies would think better about them, and instead start putting them in solving a problem common to all of us: making more energy, cheaper, more efficient, cleaner. That is exactly what American energy companies are doing today.
