Posted by Art_MD on 9/2/05 8:55am
Msg #63460
OT - where do our gas dollars go?
The US has 190 million barrells of gasoline in storage on any given day (+/-)
We use 9 million per day.
If all the refineries shut down we have 22 day supply.
If 1/5 of refineries are off line, we would not be out of gas for 110 days.
So, why the price increase?
Katrina caused a minor distribution problem. So, the distributors/wholesellers/speculators who control the shipment, say - you want gas - start bidding. The bidding is what drove the price up. As the distribution system come back, the price should drop.
It is not the oil companies that are making the money. Here's how they make it:
Oil companies are several divisions - exploration, drilling, production, refining, distribution and sales.
The production division pumps 1 million barrels a day.
The refinery division refines 2 million a day (1 million imported)
Last year production costs were $20/barrell and world price was $30/barrell.
Refining division buys at world prices.
So, the production division makes $10/barrell or $10 million per day or $365 million per year.
The world price goes to $60/barrell. Production costs stay the same, BUT, the production division now makes $40/barrell ($60-$20) - profits quadruple when world price doubles.
With the tight refining capacity in the US, there is no reason for a company to try and capture a greater part of the market by lowering price - if they did they couldn't supply it.
These number are only for talking purposes.
In general, gas station owners make <.15 per gallon.
Art
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