Posted by Art_MD on 11/2/07 11:06am
Msg #219444

Guestimating gas prices

A quick and dirty breakdown of the $x.xxyou pay for gas.

A barrel of crude is 42 gal - but when refined yields approx 50 gal.

$90 crude means the raw material for a gal of gas is $1.80

Refining cost approx $.48 gal (2005 cost per U.S. senate testimony)
Shipping costs - well to refinery .02 to .10
distribution cost $.15 (refinery -> pipeline -> terminal -> truck to station)

taxes (+/-) depending on state .45

profit refiner .09
profit distributors .10
profit gas station .10
total profit .29

Total cost 1.80 + .48 + .06 (ave del to refinery) + .15 + .40 + .29 = 3.23

If your taxes are greater than .45 for state and fed, I bet your price is higher.

A lot of refiners lock in prices FOB shipping point. So crude purchased 3 weeks ago might just now be arriving at the refinery in TX, NJ, LA etc. If West Texas crude, shipping costs are less than North sea Brent crude. We are buying gas made from crude that probably ws purchased 3-6 wks ago. When the expensive crude hits the refinery, look for a hefty hike.

Number to remember - for every dollar crude rises or falls, the cost per gallon of gas is $.02 up or down.

Art

Reply by Linda Juenger on 11/2/07 12:44pm
Msg #219456

To add to your comment Art about crude purcashed 3 weeks ago just now arriving at refinery.

Last year everyone was up in arms when big Oil companies boasted record profits. The same concept applies here. Oil companies bought crude some 20-30 years ago at record low cost. They stored this crude in various places (Canada for one) and just let it sit. Last year they released this crude to refineries, thus making a huge profit. They also endured huge costs in storing this crude for decades.

Reply by Yoli/CA on 11/2/07 12:51pm
Msg #219458

Question: I'm in Northern California, where we have several refineries. Why is it that gas prices are lower in areas furthest from the refineries?

Reply by David J Mayo on 11/2/07 1:00pm
Msg #219460

Calif is the most populous state in the nation. Over 3/4 of that live between Santa Barbara and San Diego counties. Reasons prices are out of sight are supply and demand. We got the most people. We can be charged the most and gutted like a fish....


Dave M

Reply by Linda Juenger on 11/2/07 1:54pm
Msg #219465

Dave is right. The entire problem is Supply & Demand. We are ALL using too much gasoline. Refineries cannot keep up. When Americans fall OUT of love with their cars, get off our butts and start walking, bicycling, car pooling, using mass transit etc etc etc, this problem is not going to go away, ever. I too live 30 miles away from a refinery. Gas is high here also. Has nothing to do with it. Everything is higher in CA. Just a fact. Look at home prices. If I could move my home across the country and over the mountains and sell it CA, I would never have to work again. You would give your right arm for my backyard.

Reply by Art_MD on 11/2/07 2:08pm
Msg #219466

Re: Guestimating gas prices - minor update

I left out one item in the calc.

The gas stations cost of doing business. May be .10 gallon. BUT, if the rent for his station is .20 gallon that comes into the equation. I'm sure rent, city sales taxes, occupancy taxes, etc vary greatly.

Also, CA has special blend requirements. Refineries outside of CA do not make that blend - it costs more to make. That helps push up CA prices. Also, I believe that certain cities have unique blend requirements and this causes additional cost for the gas sold in those cities.

Art

Reply by Linda Juenger on 11/2/07 3:51pm
Msg #219490

Wish we could have made 10 cents a gallon - long

Art, I wish I could have made 10cents a gallon profit. We owned and operated 6 stations. Sold all 6 over 3 years ago. Our break-even point was a profit of 8cents a gallon. We were lucky to make 3 cents and most of the time we sold below cost. Our inside sales were not sufficient enought to sustain that loss. All our stations were in small towns that just could not compete. The last 3 years in business destroyed us financially. We had to get out or go bankrupt. We were a major brand and the requiremtents they kept putting on us, we just couldn't compete anymore. It was a sad day for my father-in-law the day we closed our doors. He spent 53 years in the gasoline business and my husband has spent 35 years working side by side with him. The little small town business man cannot make it anymore. We even owned all the property, buildings, tanks, pumps and even owned and hauled the gas in our own 18 wheeler tanker truck. No middle man to pay. Its a very very hard business to survive in unless you are huge and can buy by the millions and millions of gallons ahead of time. Sorry, didn't mean to tell my life story. There are so many factors in the price of gasoline. EPA requirements are one of the biggest. If the EPA would go to just a couple of different blends for the entire country it would be workable. But, there are many many. Even here in the midwest, there are too many. Where I live requires a different blend that a county only 8 miles away does. Its just ridiculous. Sorry so long.

Reply by BetsyMI on 11/2/07 4:02pm
Msg #219493

Sorry for your family's woes...Interesting! Thanks Linda J n/m