What am I paying for in the price of a gallon of gasoline?

I’m asked this question a lot. And I know a lot of drivers ask themselves this question when they pull up to the pump.

The answer is based on the economics of supply and demand and how products are manufactured and sold – along with what the government takes in taxes. Let’s take a look, based on the U.S. Energy Information Administration’s breakdown of the estimated average price of a gallon of gas in December 2011, which was $3.27.
Raw materials = $2.62

The cost of the raw materials used to make a product has a major impact on the final product price. The raw material for gasoline is crude oil. The price of crude oil is set by global markets, where buyers and sellers constantly react to supply and demand factors. Oil is just one of many commodities traded every day in the global market. Others are the corn that affects the price of food and the cotton that affects the price of clothing.

Crude oil is by far the largest factor in the price of a gallon of gasoline – accounting for 80 percent of the $3.27 average retail price per gallon in December, according to the EIA.

To put that in another way – about $2.62 of the average gallon of gas in this example is set before a refiner even touches the raw material.

Where I find many people get confused is that they assume oil companies are producing all the oil that goes into their own refineries – and therefore can control gas prices by controlling the supply chain. That’s not the case.

U.S. crude oil production in 2010 was 5.5 million barrels per day. But U.S. refineries processed 15.2 million barrels of oil per day – almost three times more oil than was produced in the U.S. That means U.S. refiners, like ExxonMobil, have to purchase millions of barrels of crude oil – at market prices – to produce gasoline and other products for American consumers. For example, in 2010, ExxonMobil spent $198 billion purchasing oil around the world for its refining operations.

Manufacturing the product

Like any product, there are costs to manufacture it – so the manufacturer tries to recover those costs, plus make a profit, when it goes to sell the product.

The refining portion of a gallon of gasoline has, on average, accounted for about 11 percent of the price in 2011, according to the EIA data through December. That means a little less than 40 cents per gallon would be due to refiners’ costs – wages, equipment, financing and others – plus their profits.

As the EIA figures show, however, refining doesn’t always produce a profit. In December, the data indicate that the U.S. market price for gasoline coming out of refineries was on average about 7 cents per gallon (-2 percent) below the refiners’ cost of crude oil alone, and before accounting for their costs of upgrading the crude into gasoline. In other words, refineries faced a market where domestic gasoline prices were very weak relative to global crude prices.

How does that happen? Refiners are “price takers” that operate on relatively low profit margins that are highly dependent on the market demand for petroleum products. That means at times, the value of a petroleum product coming out of the refinery isn’t enough to cover the costs of obtaining and refining the crude oil.

Distributing and marketing the product = $0.33

Products then have to get from the manufacturing site to the retail site. When gasoline leaves the refinery, it is shipped largely via pipelines to local terminals. There, distributors load their trucks and transport the gasoline to a service station. Naturally, each step in the distribution chain includes labor, capital equipment and other expenses that must be recovered by operators. Of course, these operators must also compete to sustain their profitability while also paying taxes.

Retailers then set the price at the pump, based on recovering these costs of getting gasoline to the service station and the costs of marketing it to consumers. They also have to generate enough money to pay their taxes and make a profit to keep their business running. And on top of that, they have to collect mandatory state and federal gasoline taxes from the consumer (which we’ll break down in the next section).

So who are the retailers setting the prices? When consumers pull into an Exxon or Mobil station, they assume it’s ExxonMobil. But we own only about 5 percent of the stations with our name on them. About 95 percent of the stations carrying the Exxon or Mobil brand are actually owned by network retailers or local business owners – not ExxonMobil.

Taxes = $0.39

So how much does the government make on a gallon of gas?

In this example, retailers collected state and federal gasoline taxes of 39 cents per gallon on average. Total gas taxes per gallon range by state – from lows of less than 30 cents per gallon to highs of more than 60 cents per gallon in places like New York and California.

How does this compare to what a company like ExxonMobil makes on a gallon of gasoline? As we saw earlier, sometimes a company or an operation may lose money. Other times, it may make money. A competitive market just provides an opportunity, not a guaranteed profit. In the first two quarters of 2011, for example, ExxonMobil made 7 cents and 8 cents a gallon , respectively, on the gasoline, diesel and other petroleum products it refined and sold in the United States.

What actions could help lower gas prices?

Again, let’s go back to the economics of supply and demand that govern the crude oil market, since it’s the largest determinant of the price at the pump.

There are many global factors that affect the crude oil market. But adding more supplies of crude oil to the global marketplace can help put downward pressure on the price of a barrel of oil. The United States has abundant supplies of oil, from the deep-water regions of the Gulf of Mexico to the tight oil resources throughout North Dakota and Montana. Combined with Canada’s oil resources (one of the largest in the world), North America has enormous potential to add new reliable supplies to the market. And, the U.S. has one of the largest and most advanced refinery systems in the world.

But first, the oil needs to get to market. There, we’ve often seen economics trumped by politics – even as the U.S. economy remains weak. The recent moratorium in the Gulf of Mexico, as well as the decision to deny the permit for the Keystone XL pipeline from Canada to U.S. refineries, are just two examples of U.S. political decisions that serve to keep supplies out of the market.

The economics behind a gallon of gas are pretty straightforward. It’s the policies behind access to U.S. energy resources that are less certain – but critical to our energy future.


194 Comments

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  1. Richard Dunn says:

    What’s scary is the lack of efficient use of those taxes collected at the pump.

    • Byron Alexander says:

      Worse yet is that those taxes are likely not enough to offset the cost of the Iraq misadventure or the huge standing military that we keep in place to secure the oil. The true cost of oil is in the huge defense budget and our killed and wounded brave soldiers.

      • James McKelvey says:

        We did not go to war in Iraq for oil so get off that talking point. The problem is we have significatn raw materials in the ground in our won country and a Dem congress and Dem President won’t let us get it. Why are se spending billions in bailout funds for bankrupt unproven green energy companies and ignoring the vast amounts of natural gas we own and could be using as a fuel source.

        The problem is government.

        • Brian Kemp says:

          You can just dismiss a fact of life because it doesn’t jive with your predetermined political view. If we didn’t go to Iraq for oil, then why did we? WMDs didn’t exist, and we knew it. Colin Powell knew it, Karl Rove knew it, and they sold us a lie. So it wasn’t WMDs. It wasn’t to fight Al Qaeda. It is well accepted (outside of the Fox News circle) that Al Qaeda was not present in Iraq until we created a power vaccum by invading. So it wasn’t some anti-terrorism strategy. It wasn’t some idealistic human either. If it was, why Iraq and not Tibet? Sudan? Because they didn’t have natural resources for a VP’s corporate cronies to make a buck off of.

          So it’s not a talking point, James. It’s a fact that we went into Iraq and spent billions and killed off thousands of our youth to give us better control of an oil resource.

          The problem is indeed government. A neo-conservative government that has put into debt that we will probably never pay off. A neo-conservative government that you choose to defend because of some silly anti- Democratic mindset.

        • David Gatlin says:

          Hey Brian. Why do suppose Bush, Rove, et al didn’t just lie and say they found weapons of mass destruction? They had to know that their lie would be found out eventually. Why not have a plan for it? Even more amazing is that they were able to get Clinton to go along with their WMD lie years before they even took power. Remember that? Best president ever Bill Clinton bombed Iraq over WMDs. By the way, if we went to war for oil, when is that oil scheduled to be transferred? Because I’m sick of these prices and last I checked we were still paying for oil on the market.

        • George Hilbert says:

          “The problem is government.” Think about it. When the U.S. military goes into a country shooting and blowing stuff up, what happens? The answer is a huge amount of expensive military equipment is used up and must be replaced. Same for ammunition. This stuff does not come for free. The military suppliers make gigantic profits that are not made during peacetime.

          No money is made in the medical treatment of the wounded soldiers, therefore the horror stories of the poor treatment of our soldiers by the Veterans Administration hospitals, which the govt wants to close to save money.

        • Lisa Stevens says:

          Why else are we in the middle east? What National Interest does it serve other than oil? Think about it. There are Southern and Central African countries with vast natural resources that our military industrial complex doesn’t require to protect this country. Once we are off of oil for transportation as well as the rest of the world, there will be no need to meddle in the Middle East other than in countries like Egypt because of the Suez. But even the Suez will lose importance after the oil dependency is gone. That being said we still need substantial amounts of oil to produce things … but just like in the Roman days, wars were fought over salt because it was the only way to preserve food … until a substitute was found.

        • The Omega says:

          We went to war in Iraq to keep the price of Oil stable for world economics. Everyone, not just for the U.S.

          Oil is a World commodity no matter were it is from. Wold market sets the price. Even here.

          When Oil goes up, everything goes up. Food costs are directly related to Oil cost.

        • Donald Garretson says:

          The price of crude oil goes up for one reason only: to increase profit. Gasoline is on its way out and the shareholders are looking to make as much money from it as they can before the bottom drops out on them.
          Demand is down, it is cheaper to pump out and refine, yet the price goes up.
          Gasoline is a waste product from the refining of crude oil. It is produce from distilling other products. Gasoline is not a main product from the distillation of crude oil.
          Until the invention of the internal combustion engine, gasoline was a waste product that was burned off because there was no use for it.
          Even with the World economy, there isn’t a legitimate reason gasoline costs more than a dollar per gallon in the US, except greed.
          Because of the increase of plastics production in the US alone, we have an abundance of gasoline (a waste product from making the raw plastic material out of crude oil), and that’s why even though over all production is down, there isn’t a gasoline shortage happening in the US or the World.

          The reason Mr. Cohen can honestly say 80% of the cost of “producing” gasoline is the crude oil is because the yield is so small comparatively. There would be a huge waste of raw material if you were to actually make gasoline a main product instead of a by-product of refining.

        • James Henderson says:

          Really? I wonder if we would have gone to war if Iraq’s major export were broccoli (Bush’s favorite)?

        • Barbie Berg says:

          I agree – the government is the problem- However you are naive to believe that oil is not the reason we went to Iraq! Do the math, if you did any research you’d find that our government has already admitted to it! (FYI to everyone: WMDs were found- they were the one our government gave Iraq! I know some of the soldiers that found them. Our government didn’t want the public to know it was ours!)

        • ron Lewis says:

          Brian Kemp says: “You can just dismiss a fact of life because it doesn’t jive with your predetermined political view,” and then proceeds to invent a non-fact that jives with his predetermined political view: “WMDs didn’t exist, and we knew it.”

          And more hyperpartisan idiocy, right after decrying hyperpartisan idiocy: “It is well accepted (outside of the Fox News circle) that Al Qaeda was not present in Iraq until we created a power vaccum by invading. So it wasn’t some anti-terrorism strategy.”

          I seriously believe Brian doesn’t even realize that he’s a biased propagandist? His entire post is partisan screed. He’s the guy with dog poop on his shoe accusing others of farting.

          SMH People like Brian are why I know this country is doomed.

        • Jorge Saucedo says:

          What is the matter with you all Republicans? what did we get to Iran for if it was not for the OIL?
          The profile of the republican:
          Ignorant, arrogant, out of touch with the real world, emotions dictate their lives, cannot think for themselves, easily irritated.
          pushy and cannot compromise, it is their way or nothing, religiously and very devoted usually Christian, their heats full of hate to minorities, gays, free thinking women, non practical at all,opinionated, and their world only exists on their terms, no other religion is accepted.
          DO NOT FORGET, WE HAD A SURPLUS OF MONEY BEFORE THE PUPPET OF BUSH TOOK OVER.
          THE DEMS KNOW WHAT THEY ARE DOING, MEANWHILE TO BAD LOBOTOMY FARMS ARE OUT LAWED.

        • hepster gump says:

          dont be silly james , of course the iraq war was about oil , power, and greed .

        • Rick Olson says:

          Colin Powell still says, contrary to the propaganda from the left, that we went into Iraq because of the intelligence reports that said there were WMD. The faulty intelligence was thoroughly documeted in the bipartisan Congressional report titled, The Commission On the Intelligence Capabilities of the United States Regarding Weapons of Mass Destruction–it’s easily found on the internet. If Bush had lied Pelosi would have impeached him. She took this option off the table because she knew this report would exonerate him.

      • s o says:

        your response hit the mark! great reply which many people don’t know… no blood for oil..

      • Marc A. says:

        Most U.S. oil comes from Canada, Mexico, and Venezuela; out of those three, only Venezuela is a member of OPEC. After the 1973 oil embargo, it was determined that most U.S. oil imports should come from the western hemisphere. Saudi Arabia is the leading Middle Eastern exporter of oil to the U.S..

        There is no evidence, other than opinion, wives tales, and hysteria, that America has been taking oil from Iraq. Iraq has one of the largest reservoirs of petroleum in the world, but most, if not all of it, will be exported to Europe, Asia, and Africa. Why? Because transporting oil is expensive, so the shorter distance it is transported, the less expensive it will be.

        Democrats said the same thing that President Bush said about Iraqi WMD; the only difference is that they did not send an invasion force. If President Bush lied, then so did Sen. Clinton, Sen. Kerry, VP Gore, and others; no one has ever accused them of “lying.”

        The U.N. and U.S. chief weapons inspectors both wrote the same thing in their final WMD reports about Iraq. They both wrote that AT THIS TIME, they did not find WMD stockpiles in Iraq, but they did find evidence of WMD production programs that were being concealed from U.N. weapons inspectors. They both believed that these WMD programs would have been restarted when the U.N. sanctions were lifted, something which France, Germany, China, and Russia were asking for. Why were they asking for it? Because Iraq has… read more »

        …such large supply of OIL, that they wanted to open its market up both for the benefit of their OIL COMPANIES, but also to help stabilize the world oil market, which Europe, Africa, Asia, Australia/New Zealand, South America, and North America are dependent on.

        President Bush was president of the U.S., but not of France, Germany, China, or Russia, and certainly not president of every continent. Oil is like wheat, corn, soy, beef, pork, and other commodities: people all over the world use it because it is the most efficient and CHEAPEST source of energy. Green energy is MORE expensive than oil and is LESS efficient; that is why no liberal democrat billionaire, such as Bill Gates or Warren Buffett has built a car that runs on any “alternative” fuel.

        We get all the lectures from the “green” crowd about the wonders of alternative energy, but they cannot build a car that is the same price as a gasoline or diesel car or that is less expensive to fuel. All they can do is spout off about conspiracy theories that are proven wrong when electric cars come to market, full of tax breaks and built by government run American auto companies, and the average consumer either cannot afford to buy them or does not want to go through the trouble of driving and recharging one. The I Phone is popular; the electric car is not.

        Oil is LESS expensive than electric powered vehicles at this time; perhaps one day that will change, and then the market will reward the more efficient one. But “green” people cannot tolerate the idea that consumers, primarily the middle class, including minorities, single mothers, and the elderly, are allowed to make their own choices in life, so they want to use the government to make those choices for them, ie: fascism.

        Oil beats all other fuels, unless a fascist state can cause enough market dislocations to drive the price of oil so high, that a more expensive and less efficient fuel can become attractive to consumers. It is government energy policy that drives up the price of gasoline, by affecting the supply. Even today, the government makes 39 cents per gallon of gasoline, while oil companies make only 7 or 8 cents per gallon.

        The green energy movement is based on politics, not on science or economics; it can only be successful through centralized energy policy and fascism. If alternative energy is more expensive than traditional sources, the public will choose the latter, unless the government can either force the price of oil higher or force people not to use it.

        But there has never been one shred of evidence that the U.S. went to war in Iraq in order to see more oil shipped to Europe, Asia, and Africa; none.

      • Fred Bartlett says:

        At what point in this conflict did IRAQ leave OPEC and fall instead under the control of the US? America is absolutely terrible at this whole ‘blood for oil’ thing, if we forgot to rip Iraq out of OPEC…

    • Mark Young says:

      BTW Brian; Do you still think the Muslim Brotherhood and Al Queida didn’t show up until after Egypt and Libya were attacked by Obama (without consent of Congress like Bush did in Iraq). ANd we see form teh hte latest in Egypt this week and libya the alst few weeks what Obama’s actions did to further de-stabilize and tilts the Mideast toward Muslim extremist domination, which is what he wanted. Not helping Iran when not once, but twice, they pleaded for help from the Muslim extremists and Obama did NOTHING!

    • rosemary piedra says:

      I agree where is all the money they collect? It is suppose to help rebuild our roads and bridges. I bet it is missed managed by our bureaucrats, as usual.

    • Dan Nelson says:

      “The cost of the raw materials used to make a product has a major impact on the final product price”

      LOL..!! Yup and thats why all the major Oil company manipulate the market to artificially increase Yeah Richard it’s the taxes hat are the problem LOL.!!

      If you really want to know why oil is so expensive Just Google “ICE” or Intercontinental exchange..

      ICE is a very special club that works like a members only Stock Exchange for oil. It’s only members are Morgan Stanly, Goldman Sachs and every large oil company in the world..

      Heres how ICE members screw consumers by artificial manipulate the price of oil..

      For example say Ice wants to raise the cost of oil 5 dollars a barrel on the open market. What they will do is Exxon will sell a few 100 million barrels of oil to Shell for say $5 a barrel over market value. Two days later Shell Sells Exxon back the same oil for the same price ( It was just a loan.. LOL…!!)

      Now they continually keep selling this same oil back and forth to each other at ever increasing prices. What this does is artificially drive up the cost of oil on the open market and it has nothing to do with real market value of oil. It’s all nothing more then unethical market manipulation, which explains why Morgan Stanly, Goldman Sachs are members as they are the defacto kings of screwing consumers… read more »

      …through unethical market manipulation .

      Unethical Artificial manipulation of oil prices costs the average Tax payer a few 1000 percent more every year then they pay in tax’s.. This works nicely because they consumers are kept distracted with the red herring known as taxes which keeps them from noticing the ass raping the the oil companies are giving them..

      The simple fact is if it wasn’t for ICE unethically manipulating the market price of oil, gas at the pumps would still be under a dollar a gallon. But hey keep on worrying about that 12 percent in taxes, Morgan Stanly, Goldman Sachs and big oil loves it when consumers are distracted which kinda explains the motivation for BS in this article..

  2. James West says:

    There are so many facts that are NOT revealed in this article as to make it sound like a political campaign oratory!
    For the first and major fact not addressed, is the fact that gasoline is only one of the products extracted from raw petroleum. If gasoline is the only product sold from all the products extracted, then this article makes sense. However, we all know that is not the case.

    If the market price for ALL of the extracted products is factored in, then it reveals quite a different picture as to the TRUE cost of the gasoline as it arrives at the local pump.

    I challenge you to write an accurate article which reveals the TRUE cost of gasoline at the pump. As this article would suggest, there is no contributing profit from the sale of ALL the other extracted products, that gasoline bears the entire cost of the raw material.

    Come on guys, we aren’t morons here! We deserve the whole TRUTH, not the same old rhetoric we hear from every other source…!!

    • James Wheeler says:

      Hello, James West,
      When computing the cost of any product, whether gasoline, shoes, or doughnuts, the numbers used always relate to that product and that product only.
      To factor in costs related to other products would totally distort the picture and would be meaningless.
      I view Mr. Cohen’s comments to be straightforward and informative.
      Have a great day!

      • Chris O'Brien says:

        So apparently Vaseline is free, not just a disposable waste product of refining?

      • Gary Lease says:

        Where do we get propane? Is it a byproduct of crude oil made during the refining process of gasoline for our cars? If this were, true why do we pay 3-4 dollars per gallon? If this was true how much profit is in this byproduct? Lets add this into the mix.

        • The Omega says:

          The $2.62 is based on the 40 gallons of oil. About 10% of oil is burned off as steam.H2O
          About 20 Gallons Average of the barrel is Gasoline. Different Oil grades very. The By products absorb the same $2.62 per Gallon. Otherwise the 20 gallon of gasoline would be calculated at $5.24 a gallon.

        • Micky Baker says:

          It’s really pretty simple. At the cost of $2.62, a barrel of crude oil would cost $110.04 not counting the cost to transport it via ship to refineries. Only about 20 gallons of gasoline comes from a 42 gallon barrel of crude oil. Selling the gasoline only would result in in about $60 to $80 in sales, not enough to pay for the crude oil is it? The by-products, Diesel, propane, Jet Fuel, Aviation Gasoline, Motor Oil, and the other uses of petroleum come from the rest of it. When it comes down to it, the gross margin for the refiner is extremely low, less than 20% for every gallon of gasoline they sell. The rest is described in the article. The price you pay at the pump includes taxes that they are required to collect(so you blame the retailer or the refiner for that as well).

          It is time to start using logic, not emotions.

    • Bill Kilgore says:

      “Come on guys…” yourself. Get a copy of their financial statement and do a little homework. In the 3rd quarter report they indicate Income Before Tax of 18.68 bil. After Tax Net Income is 10.33 bil. That’s 43% taxes on the corporation on top of of what they show here. Relocate to Canada, like Tim Horton did, and their corporate taxes would be 15%. Add in having to pay the union boys sweeping the floor $60 an hour in wages and benefits and threats from the likes of Hillary Clinton(!) to take ALL their profit to subsidize wind mills and moonshine.
      Is there any question why American companies move off-shore? Why our TRUE un-employment is upwards of 20%.
      “Come on guys…” indeed!

      Bill Kilgore

      • Tuck Smith says:

        Come on, yourself. All those taxes you’re complaining about –went to OTHER countries. Not to the US. From a 2010 Forbes article, “What the financial statement says is that ExxonMobil, in 2009, after a handful of deferrals, recorded a total U.S. income tax benefit (i.e., a refund) of $46 million. Next to this, it shows total non-U.S. income taxes of $15.165 billion.”
        So, before your next rant about all those “evul” US taxes those “poor” corporations have to pay, how about doing your OWN homework?
        Sheesh.

        • James McKelvey says:

          Hey Tuc, if we could drill in our own country perhaps the business tax revenue would show an appropriate growth rate. It matches the controlled/regulated market they are in.

        • The Omega says:

          Those deferrals are income from other countries. It’s deferred until the income is repatriated to the U.S. If that money is spent in the Country earned, then Tax is not applicable. It falls under that Countries tax code,
          Earned income in other countries pay around 25% tax average. If the profits are repatriated to the U.S. which has a 35% tax, then the difference has to be paid. An Additional 10%.
          One thing most people don’t understand is that Corporations don’t really pay Tax. They Collect it for the Government. It’s all figured into the price.
          Don’t believe me, start your own business. Figure materials labor & all other expense which include taxes, Fed, State, Local, Then add your markup. Anything other then this equals Going Broke.
          Also when Politicians rattle off the profit, They omit the fact that for Oil companies, about 75% of profits come from outside the U.S. & the taxes already paid. It’s very deceiving.

          Try this. Go to work for a year in another Country. Pay all your taxes required in that Country. Then Come Home. You may be responsible for additional taxes when you get here. Also as an Individual, you get no deferral. And if your married to a foreigner born & raised their, They also may be tax liable.
          There’s been Foreign relation problems over this. They want to know what the Hail were doing trying to tax their citizens.

          They could say the same about the Oil Companies as most of the big boys are Foreign owned…. read more »

          …They actually only owe taxes on the Money earned in the U.S. Not what they earn abroad.

      • p s says:

        60 bucks for sweeping floor sounds high, untill you look at ceo pay thats 77519. bucks per hour

      • Carrol Kessens says:

        Bill, there is a difference in accounting for income tax and actually paying for income tax. If you did a little homework, then you would realize that they did not pay 43% income tax. Look at the increase in Deferred tax. In the deferred tax account, you will find items that are in the accounting for income tax that they are not actually paying in income tax. This account for Exxon has more than doubled in the last 4 years.

        • David Buller says:

          Tuck, I do not think you have a good handle on financial statements. OIl companiese are paying in huge levels of taxes — more than other industries. (And no one has been able to point to a tax break going to oil companies that is not also given to other companies in the IRS code.) Compare the taxes paid by oil companies to the give-away that the Administration is making to its friends and political allies!

      • Michael Shepard says:

        When we add the lack of logging here in NW Montana..our un-employment rate is nearer 25% plus.., not adding those who quit searching for nothing sad..that is why we need our hemsipheres oil. nat gas and other resources used

      • David Creighton says:

        You know you hear this Corporate Tax argument alot. The rate is 35% & they get subsidies so they aren’t paying 43%. Maybe they did something that quarter to shift around the profit. The real people that get screwed with Corporate Tax are retail outlets, but anyways you do realize that is just 1 company making more in a year than our Homeland Security budget and almost half as much as China’s entire defense budget.

        If you want to cut corporate tax fine. Take it down to 15%, but stop giving tax breaks for anything and make Capital Gains & Carried Interest be considered Income like they should be and not taxed at a lower rate.

        Another thing why does this XL Pipeline thing have to run the whole way through the breadbasket of the USA. Wouldn’t it be better to put a refinery on like Lake Michigan. That way we would be more likely to actually have an increase in supply as opposed to if you pump it down to Texas where it just gets sold on the World Market?

        • Paul Hillman says:

          David,
          ” do realize that is just 1 company making more in a year than. . .”

          It not the total income amount to get upset about, they have cost, risk, etc to be compensated. If you want to get angry about corporate greed, look at those companies with fat margins.

        • Generic Consumer says:

          The reason they want to pipe it to Houston instead of refining on Lake Michigan, is because the refined products are mostly going to be EXPORTED. See my more extensive comment farther down on this.

        • Mike Murray says:

          Regarding your question on the XL pipeline there are many refineries already built on the Gulf coast which have excess capacity. I think all the crude would be refined there instead of being shipped out – that’s like taking coal to Newcastle. Refined product, however, might be shipped out.

          To build a new refinery on Lake Michigan might take five to ten years even if you could get permission with all the environmental studies, lawsuits, special interest opposition, etc. Who wants a big refinery in their back yard? I think you would see peace in the Middle East before you would see a new refinery on built on Lake Michigan.

      • jack bonde says:

        Bill,
        That response is plain silly. I don’t see any price reduction on any non union car here in the states. The companies move to increase profits and still charge the same price. I bet you also believe on the temporary tax idea too!

      • max barry says:

        Mistatement and hyperbole. Union janitors don’t earn $60 dollars an hour but top executives make about $2000 an hour.
        And if you claim they are working so much harder, how can you explain their average life expectancy is much older than laborers?

        • Micky Baker says:

          Here we go with blaming the “top executives” on a company that has $350 billion in sales per year and sells millions of cars per year. So, you take the CEO’s salary, and cut it by $9 million to 1 million and divided that by the number of cars they sell, 3 million. What do you get? $3 savings per car. The unions cost way more than that per car, at least $3000 or $4000 per car.

    • Richard Ray says:

      I think what Mr. West is saying is that it’s improper to include the full cost of the crude oil that goes into refining gasoline. This article does not make it clear, nor does the USEIA article cited here. Given, say 1 barrel of crude oil, some of it is refined to gasoline, some to diesel, some ends up as asphalt. To say that 100% of the cost of crude oil should be factored into the cost of gasoline is of course incorrect. However, I don’t think that this was done here either. This is a classic example of over-simplification

    • Doug Boone says:

      So James West, if you think refining is such a great business, why don’t you start your own refinery? Then you too, can stack up the big bucks. Oh wait, sorry I forgot the tree huggers will not let anyone start a new refinery these days just like they keep us from using nuclear power by covering investors in paperwork. Well alt least you could go to west Texas and buy an old existing refinery, but wait, some of those same folks will not even let you start up an existing refinery, again a reason our jobs are moving off shore. Soon we will all be like Joe Biden and be forced to take a 200 tonne government subsidize train to work each day.

    • Jack Frost says:

      James,

      Sounds like you have a handle on the issue. Not only are there several other products produced refining process but also there are several gallons of gasoline produced for each gallon of crude. I’m not sure just how many gallons it is but it’s certainly more than one.

      On the other hand, this article is credible if for no other reason it’s on the Internet. Who in their right mind would question that??

      • edd anders says:

        I’ve never heard such supidity as these posts. But Jack Frost yours is the winner.

        You claim by boiling oil you can make several gallons gasoline. And you are certain of this. Look up the 3 2 1 crack spread. That should be simple enough for you. And the diesel, heating oil and asphalt is additional? How does this work out by weight? They must add water and lots of it to get these results.

    • ron Lewis says:

      Wow. You are misguided. The article doesn’t mention the other products because it’s talking about gasoline. And nowhere does it claim that the crude oil cost it cites is the cost for crude used for all the products extracted from crude as you assume.

      Any open-minded non-zealot would logically conclude that the crude cost it cites is the cost for only that percentage of crude attributable to gasoline, exactly as the article states. If you had better reading comprehension skills, you’d understand from that last sentence why you don’t reach that logical conclusion. (hint: think “close-minded zealot”)

      But why does your paranoia stop with the crude cost? why aren’t you also suggesting that the manufacturers also make more products, so their cost is misrepresented? And the retailers also have other products shipped to them, so why don’t you think those costs are misrepresented? ditto with the taxes – you know the government taxes other products from crude, why aren’t those costs deducted from the amount cited?

      Do you even realize how silly you sound?

  3. C. Gates says:

    “…two examples of U.S. political decisions that serve to keep supplies out of the market….”
    Artificial supply constraints, imposed by government, are the biggest factor in per gallon ‘pain’ to consumers. The number one (by far) prospect for significant US oil continues to be denied to proper development. +8 BilBarrels – at the least, is available at a known location – at a site set aside in the 1970′s specifically for oil exploration and production – ANWR on the north coast of the most remote location on earth- located close to a pipeline that is starving for throughput… Yet ANWR is denied to our country for fear of disturbing the sensibilities of kids who have no idea how remote, un-special and ideal a location it is for oil production. The locals want it. Alaska needs it. Caribou thrive near man-made oil facilities. Pad area for +7Bil BBLs would be about the size of Dulles AIrport in an area bigger than the State of Iowa…Absolutely nothing is unique or special in this arctic wasteland that is worthy of forcing us to buy oil from the Middle East rather than putting Americans to work providing oil from our own land. Prudhoe, a few miles to the east shipped +2milbbls/day = 20% of the US required oil per day 12 years ago. It’s now down to ~600,000bbl/d and decreasing at an increasing rate. ANWR needs to be approved for development to keep the TAPS pipeline operating. If we lose that 800… read more »

    …mile piece of nationally-critical infrastructure our options for self production in time of oil games from the middle east are greatly reduced. To those who have any concern for the environment – stand back when the country really needs to open ANWR – it will be ripped open in months rather than properly developed under the 13,241 required permits and monitoring tasks of normal modern oil-field development. Get Govt. away from artificially constraining supply! Reduce our need for foreign oil. Allow this oil field to be developed!

  4. Jody Bilyeu says:

    The problem that people looking at this diagram and reading this blog post are likely to immediately recognize, but perhaps are struggling to explain–namely that the diagram makes it look as if oil companies aren’t making any money off of gasoline–has nothing to do with inaccuracy or manipulation of the figures. I’m sure they’re quite accurate.

    The problem is that for companies, payroll is counted as an expense, not as profit. In other words, the enormous salaries and bonuses of oil company executives are included in this diagram as a part of the cost of producing oil.

    That depiction is, of course, dishonest, and I imagine intentionally so, in terms of how the public will register the information the diagram presents.

    In fact, when it’s in a company’s interests to do so, as showing small profits in that diagram is in Exxon/Mobil’s political and PR interests, that company can decrease its profits showing on the books by increasing its payroll. In other words, everyone involved in running the company is making more money, while on the books the company is turning less profit. Make no mistake: Exorbitant executive salaries account for a substantial portion of what you’re paying for fuel. To put it a different way, they are profiting handsomely by increasing your hardship.

    In business terms, the people who should be taking responsibility for this state of affairs, which is to say this institutionalized dishonesty and the fiduciary waste it’s meant to cover, are shareholders and boards of directors. Those groups… read more »

    …are presently not shouldering that responsibility.

    Given that in the instance of oil companies, inflated salaries and bonuses of executives are absorbing vast revenues that could be decreasing our fuel prices, or being used to develop sources of energy that don’t compromise our national security, the American public also has a responsibility to call for accountability from oil companies, in addition to accounting. We are not shouldering that responsibility, either.

    I imagine if executive salaries and bonuses had their own stripe in the diagram, they would consume the lion’s share of what’s depicted here as “crude oil” costs, and they would exceed the size of the “Taxes” stripe by a good margin. The fact that the “Crude Oil” label is now used in that diagram to embrace the unimaginable amounts of intentionally hidden money going into the pockets of very wealthy people, even as other Americans are struggling to fill their gas tanks is a) insultingly disingenuous and b) an indication of a single lapse in common decency in the author, Mr. Cohen, which is merely one instance in an ongoing lapse in corporate responsibility and common decency in the company which sponsors him.

    • Walter Waldman says:

      Jody, you have pinpointed a fundamental flaw which is inherent in our economic system, the solution to which, lies outside that system. Exxon Mobil must, in order to survive in the competitive market, manage its business according to the rules of the system. This system incorporates the principles of profit and of interest.

      Profit, as instituted in this system, is a cost to the buyer which neither produces nor adds to the value of the service or product being offered.

      Interest is a cost to the consumer which adds no value to the product or service consumed.

      Together, these two underpinnings of our economic system syphon financial resources from the productive cycle and from the market place. In so doing, financial wealth is gradually concentrated in the hands of a few and out of circulation in the broader market.
      The results are unemployment, stagnation of the economy and poverty for masses of the population while outrageous wealth accumulates in the hands of a relatively few.

      While Exxon-Mobil’s altruistic motives may be suspect, it is compelled, I believe, to play the game by the rules of the system for its survival.

      • Wayne Foreman says:

        You have the rules entirely wrong. Profit is difference between the value of a product or service and the cost of producing it. If a company produces more value than it costs, it makes a profit. If the output is less valuable than the costs, it generates a loss.

        This is why the capitalistic system works. It rewards companies that produce valuable things and punishes companies who do not. The result is more valuable goods and services for all consumers.

        • Joshua Felt says:

          This is only the case when you have true supply and demand determining the cost. The “value” of a gallon of gasoline to the consumer does not change on a daily or even monthly basis. Yet the cost of that gallon can fluctuate wildly during those time periods. The supply of gasoline is controlled by very few, relatively speaking, and that supply can be altered at their discretion to effectively change the price of gasoline from day to day. For the average consumer, there is no alternative and therefore no recourse that in other industries would offset the rising prices. You pay, or you starve. Capitalism has no answer for regulating the market for unique commodities that the consumer depends on for survival. Our hands are tied, as are our wallets to the discretions of a loosely regulated few that are obviously taking advantage given the record profits that are posted nearly each and every quarter.

      • Henry Pratt says:

        Government and taxes siphon off resources from the productive cycle and the market place. With lower taxes a corporation is left with more money to reinvest in research and development or in new processes that allow them to lower their costs and/or make their products better. Profit is not a dirty word but is a necessary component. Without profit there is no need to be in business in the first place.

        Take the wealth away from the relatively few and who is left to help bring the masses out of poverty? Is the homeless person down the street going to offer them employment? Would it be possible for everyone to work for the government? Where would the money come from to pay all of the government employees?

        • Joshua Felt says:

          Rising profits contribute to corporate bonuses, not to salaries. Salaries are figured into set budgets. R&D is also fixed in the budget. These profits you speak of are not necessary to keep an industry productive and alive. They facilitate growth, which isn’t taking place in the oil industry to any significant degree, and/or they pad wallets. Company executives do not require huge bonuses for survival. Profit is not “needed” for business. There are plenty of non-profits that are self-reliant and fill a need. Take the absurd bonuses and exorbitant salaries of these few away and you’re still left with wealthy people to run businesses and provide jobs for the masses. You honestly think these executives are bringing the masses out of poverty? Save for the few that actually created an industry, these executives are leaches with golden tickets.

    • Wayne Foreman says:

      Wow… what a bunch of socialistic garbage. First you would argue that the oil companies make too much profit and need to be taxed more. Then, at the same time, you argue that they make too little because they compensate their executives excessively.

      The compensation of all levels at any company are set by the Board of Directors and all is disclosed to shareholders who have the right to replace the Board and management if they feel they are not getting good value.

      The market determines the appropriate salaries.

      • Gary McLean says:

        Corporation A – consisting of one person supplying labor to a marketplace – Is taxed on their gross earnings.

        Corporation B supplying a material or product to the marketplace – is taxed on their net income (Gross less expenses).

        Adjust tax code so tax burden is equally shared on gross profits and both cost of oil and executive compensation would crash.

        • The Omega says:

          Your Comparing wages to profits. You can’t do that.
          If Corporation A is just 1 person paying Corporate tax plus wage tax & has nothing involved other then his labor, Then he shouldn’t be in business.

          Corporation makes a 10% profit having to pay 35% on gross would have to increase prices by 50% or more. Otherwise they would have a net lose of over 25%. Just close the doors.

          Also note that Corporations pay State & local taxes on top of the 35%. When the Profits are distributed to share holders they pay another 15% Capitol gains plus a State Capitol gains.

          Another Note: If you have a pension plan that is Tax exempt until you draw income from it. It’s a LIE. It was taxed at Corporate rates before it was ever paid into you pension fund.
          Then you pay taxes again when you collect it.

    • The Omega says:

      A $15 billion profit may seam excessive. It actually needs to be kept in perspective. If I borrowed a $1000 dollars from you & only paid you a dollar in interest would you think that’s excessive. Raise these amounts equally & at a certain point I may be paying you Billion. From a laymen’s terms that may look excessive. You have to look at the percentages. The Amount doesn’t mean much. A 10% margin is reasonable. 8% or less means a foreign company buys you up & then you have Zero say. That’s just business.

      Note: that a 1 cent per gallon tax Nationally equates to about 1.5 Billion dollars in government Revenue. It’s all based on Volume.

      As to the Exorbitant executive salaries, I Agree, it’s kind of ridiculous. But in the scale of things it probably doesn’t come close to a penny a gallon by a long shot.

      Also note that a Single new Drilling platform for deep sea drilling cost $12 Billion dollars 15 years ago. I would imagine the cost is Much higher today consider scarp steel has went up 8 fold plus per tone.

      • Donald Garretson says:

        Kinda of confused about what you tried to say here, but from what I could understand you seem to have forgotten one thing: Profit is what you have left over AFTER accounting for ALL costs/expenses. It would not be Profit if you didn’t account for everything.
        Margins and profits are different things.

        If 1 cent per gallon tax equates to about 1.5 billion (i’m guessing you meant annually), then yes the CEOs salaries would definately be a factor per gallon. Since on average each of the top CEOs makes at least a million per year, you add that to the next level of CEOs, and then the next, you easily have over a billion dollars per year in salaries. Don’t forget to add their benefits and perks. I would not be a bit suprised if the top three teirs of CEOs make a combined earning of 10 billion per year.
        This is only offset by all the products produced from a barrel of crude oil.

    • Henry Pratt says:

      Jody, payroll is an expense for the corporation. It does not matter if that money is made by the guy who is drilling for the oil, running the refinery or the CEO. All of these employees are required to report their income and pay their income taxes. There are tax advantages for an individual (take a doctor for example) setting up their business as a corporation. ExxonMobile showed a recent profit of $Billions while their CEO’S income was in the $Millions. Perhaps you should go to your local community college and take a course in Accounting.

  5. G E Whittenburg says:

    I note this article brings up “supply AND demand,” but does not talk about demand? You can lower the price of gasoline just as easily by lowering the demand as raising the supply. Of course then, Exxon would make less money. Very one-side information told from a single point of view.

  6. Al Cook says:

    If crude oil is selling for $100 a barrel, and say there are 50 gallons in a barrel, this would make a gallon of crude cost $20. So $2.62 would be the total cost of a gallon of gasoline of raw materials for producing gasoline. Other products would be costed against their portion of the rest of the gallon of crude.

    • John Griffing says:

      There are 42 US Liquid Gallons per barrel, so in this case assuming $100 a barrel, a gallon would cost about $2.38. In order to achieve the $2.62 figure, a reference price per barrel was likely approximately $110.

      But we in the USA are very fortunate to pay so little for gasoline. Here is just one quick example why: In Italy, gasoline at the pump has a cost of 1.80 EURO per LITER.

      2 conversion factors to consider:
      Current exchange rate: 1 EURO = approx. $1.31
      1 US Liquid Gallon = 3.785412 Liters

      Let’s do the math:
      1.80 Euro * $1.31 per Euro = $2.36 per LITER
      $2.36 * 3.785412 Liters per US Liquid Gallon = $8.93 per Gallon

    • Paul Hillman says:

      Al Cook,
      Huh, 100/50 is 2 not 20

  7. David P says:

    The real way to drive down the price of a barrel of oil is to increase the supply of energy. One way to do that which was effective in the 1980′s is to increase the role of Nuclear power in the energy mix. Nuclear powered merchant ships would reduce diesel demand. Nuclear power plants reduce demand for natural gas. In the 1970′s and 80′s Nuclear power plants replaced the 20% of electricity being generated by diesel generators at the time. I remember 80 cents a gallon at the time.

    • Michael Young says:

      David,

      While I am a staunch supporter of nuclear energy, I have to point out that in the current market new nuclear is competing primarily against expansion of domestic natural gas production rather than petroleum for power production. Fracking technology has led to a relatively abundant supply of cheap NG, and this has a lower $/kWhr than nuclear for the time being.

      That said, if we were intelligent we would think about the environmental damage wrought by the fracking and (possibly) the resulting carbon emissions from NG; I’ll trade this against long-term storage of concentrated radwaste and emission of low-level radiation during ops. Also, I’d prefer to keep the natural gas around for motor fuel – its an ideal gasoline replacement for the days ahead when petroleum supplies become too constrained to be economical.

      What I’d really like to see are small, modular, high temperature reactors which primarily generate electricity, but whos waste heat can also be used to help decompose waste streams (drive out methane –> provides feed for combustion gas turbines), or be used to convert biomass to usable liquid fuels – a carbon neutral means of producing motor fuels.

    • The Omega says:

      David

      Only problem now is only about 1% of electricity is produced from Oil. That’s probably because those plants cost to much to convert or may be getting close to dismantling age.

  8. David Rosas says:

    We cannot blame the current administration for not exploiting domestic drilling and extraction…if the resources have been there, they didn’t, by miracle, just “show up” following his election. I for one, am ready to see our nation extract, purchase or even take every drop, vapor, sand of petroleum that we can so we can finally move on to newer technologies that are not petroleum-dependent. It can be done — it’s just ignored and set aside for profits (which is fine by me). I can’t wait to take a picture in Yellowstone National Park with vast oilfields in the foreground of the mountains.

  9. Ramon Cardona says:

    We are missing the point, the boat, etc. by looking at what is paid at the pump. Not much we can do about it. BUT, we do have total control as to the vehicle that we drive, more importantly, HOW it is driven. Speeding destroyes fuel economy. Stable driving on cruise control enhances it. Speeding does very little as far as time. Forget about any speed above 60 MPH. You a second per each mile above 60 mph per each mile above. The fuel need to drive increase exponentially. By 70 MPH the car is fighting a wind of 100% increase over 50MPH. In an typical 20 mile commute it take 20 minutes at 60, at averaging 66 MPH you gain 120 seconds, if that. And what waits at the exit? Traffic, a traffic light. And you got there using 30+% more fuel. Out of 10 gallons we waste THREE gallons. Idling, chasing that perfect parking lot, driving fast towards a red light, and the biggest is passing every car on earth. So calculate your COST PER MILE rather than dollars per gallon. YOU can control the cost per mile rather well. For most people it can lead to saving upwards of $700 a year!!! This way, Exxon has less money, you have more money. Other ideas? OK, use the car less, plan the route with right turns, park so as not to use reverse (when possbie, of course), at those huge parking lots, park closer to the street than… read more »

    …the entrance, use gravity to help you down, steady speeds going up. Lots and lots more techniques. A dime hear a penny there, a quarter here will add up by the end of the year. AFter a few weeks, it will be natural, good habits and you will not notice the difference except for going to buy gas less frequently. Best wishes.

    • Donald Garretson says:

      While a four cylinder engine may be more efficient at 60 MPH, a 6 or 8 cylinder is more efficient at closer to 80.
      I have driven the same route under varying conditions at varies speeds using cruise control. The V6 and V8 I have been driving yielded more mileage per tank at 80 then at 60. Similar results at 85/65.
      On the V6, I was able to drive up to a hundred miles more per 20 gallon tank at 80 than at 60. I have not been driving the V8 long enough for an average, but currently I have been able to drive at least 50 miles per 25 gallon tank further at 80 than 60. Forget 50-55; I have a net loss of 50 miles per tank on either engine. These are stock engines with no modifications using regular grade gas. I am carrying a lot of weight in both vehicles, so that is a factor of my fuel efficiency.
      This is actually Rocket Science. A motor will achieve an equilibrium at certain speeds: where gravity and inertia are balanced with the force to over come them. (It is also how a helicopter flies.)
      The motor does less work to maintain an “equalized” speed than it does to maintain a lower speed where it is “fighting against” gravity and inertia. Stop and go is the most wasteful of fuel.

    • Henry Pratt says:

      Ramon you convinced me. You should cut down the amount of driving that YOU do and not only will you save yourself money it will leave more gasoline for the rest of us.

  10. Phil Griffin says:

    Good article.

    Losing money on every gallon refined?
    How do they turn in profits up to $40 BILLION or so a quarter?
    Reminds me of the old used car salesman’s slogan: “I’m losing money on every sale, but making it up on the volume.”
    Me thinks that must apply here.

    • Mike Murray says:

      Oil companies have divisions. ExxonMobil I think has an Exploration and Producine Division (E&P), Marketing & Refining (M&R), Chemical, and probably a few other divisions. With high crude prices they make the big money on Exploration and Producing while their M&R division can’t recover all their cost due to competition. With low crude prices Marketing and Refining usually makes good profits while E&P suffers..

      Looking at their 10K reports in the past most of their profit was made overseas by their E&P division – not at the expense of the US consumer. That profit flows back to the USA instead of flowing eastward to places like China. Its nice to have some companies who have money flowing into the US instead of out of the US.

      Regarding gasoline prices we have it really good in the US – lots of competition, razor thin margins, and much less petroleum taxes than they have in Europe. Gasoline costs around $9 a gallon in the UK mainly due to taxes to pay for social programs and distribution inefficiencies. I think I like it here.

  11. Frederick Mellem says:

    Anyone who thinks the Keystone pipeline is a no-brainer needs to do a little research.

    According to the Natural Resources Defense Council: “The brief operating history of the Keystone pipeline provides more evidence that our conventional pipeline design regulations are inadequate for pipelines moving corrosive raw tar sands, or diluted bitumen, at high pressure. After all, the company claims that Keystone I was built with ‘state-of-the-art’ design features and was predicted to spill no more than once every seven years. We’re now at 12 leaks in less than a year of operation.”

    The Kalamazoo River spill cannot be cleaned up, because of the nature of tar!

    If built, the builders and operators should be responsible for all damages. Their current mess looks like the Gulf fiasco.

    “TransCanada itself admits that by removing an oil oversupply in the Midwest, the pipeline would result in “an increase in the price of heavy crude” that should net Canadian oil producers a $1.9bn increase in revenue at the expense of American consumers. Gulf Coast refiners, which would receive tar sands oil from Keystone XL, have detailed a strategy to their investors to export the oil out of the United States.”
    .http://www.guardian.co.uk/commentisfree/cifamerica/2011/nov/10/tar-sands-oil-keystone-xl-dirty-secret

    Shipping Tar can be done quite safely, Just ship it as a semisolid in a tank car. Heat it and wash it out at the terminal.

    Supply and demand do play a part in cost. So does the value of the dollar. We are in a global competition.
    1 Euro = $0.98 in 2000 and $1.48 in… read more »

    …2008, the result of using fiscal policy as a trade policy. It is a tax on us all.
    Oil is priced in dollars, and competing currencies have an advantage buying any commodity.

    • Noel Collis says:

      When I was a boy, I worked at my dad’s gas station. Gas was 29.9/gal- tax was 12cents. Our gross profit margin was 5 cents before expenses. Our family worked ~15 hr days. the state workers used to come in and .make fun of the fact that they loafed (~15-20 would drink pop and sit around for 1-2 hrs) and took over twice what our family did. the state of Minn. then raised the gas tax. Now 20-25 “workers” would come in to loaf and laugh at me for working hard.Today, Obama would have us all on food stamps and we would not have to be so stupid – and work so hard. Oh yes, my dad and I pencilled it out once- the oil co. made between 1-2 cents/gal net profit. How dare they? The Post Office, the Democrats say, could do it much better- nationalize the dirty oil companies (so Obama can use the ENTIRE energy dept. for a political slush fund to subsidize the solyndra scam and to subsidize Cong. George Miller’s son’s “green energy” company that produces jobs in Mexico) The federal government has become a complete kleptocracy- just like a third world country. We are headed for TOTAL and COMPLETE Washington based control of all american life (Hence the policies to “regulat LEMONADE STANDS, GARAGE SALES, AND FARMERS MARKETS BY THE ADMIN. “CZARS”. In 2006, the economy had less than 6% unemployment. It is not realistic to expectObama administration to allow a… read more »

      …return to normal. they have openly stated that their goal is to engineer $10 gasoline prices (If you doubt this, then look up energy Sec.Chu and candidate Obama’s statements to the San francisco Chronicle) The rejection of the Keystone pi[peline was no surprise- it is part of the plan for ultimately engineering $10 gas. (gas here was 1.75/gal when Obama took office) Noel D. Collis M.D.

  12. Bob Griffith says:

    In the oil business, refining is not consider that important. It is a wide spot in the pipe. This being the case exploration is different business units from production or marketing. The cost of gas is related to the cost of crude. The cost of crude is artificially inflated due to speculation. The cost of crude goes up, oil still in the ground, but it is worth more. so the refining companies pay more for crude, which makes it seems as there are thin margins. When in fact they are just paying a different division. I have read that speculation represents 80% of the cost of gas. Back in the day the standard was if we can get $20 a barrel things will be good, even with inflation $100+ a barrel means lots of people make very good money. Please stop whining about drilling more. It is not about reserves, it is about a business that can manipulate the cost of raw materials to gain gross profits.

    • The Omega says:

      Actually Bob, The Governments of the World Control the cost.
      They Own 90%+ of all Oil resources & regulate When, Where, How, & How much cam be drilled for at any given time. Something they don’t care to inform you of. That way the Oil companies catch all the flack.

  13. Gary McLean says:

    Sirs:
    Your blog always seems to ignore the impact of futures trading on the price of the commodity. Specifically how real or perceived world wide issues which have no affect on supply cause radically huge swings in the price of oil and one of its many derivatives gasoline. Does Exxon/Mobil buy the 2,000,000 barrels a day it produces from itself at the current market value or does Exxon/Mobil pay solely the cost of production/fee on that product?

    • The Omega says:

      Gary

      If you own Oil wells, Refineries, & Service stations here is how it would work.

      I’ll start by saying the Oil you pump out of the ground may or may not leave your possession. The Paper World is different.

      You pump the Oil. Then Sell the Oil on the World Market.
      You Buy Oil from the World Market then Refine it.
      You sell your refined products to the World Market.
      You then Buy the Gasoline on the World market for your service stations to sell.
      Sounds dumb, But the laws were created decades ago to prevent monopolies.
      I shake my head when people Boycott like they did BP after the Gulf Spill. They still sold every barrel of oil they produced & every Gallon refined. They mostly hurt the Independent Station owner. Only about 5% of Service stations are owned by the Oil Companies regardless of the name on the Sign out-front.

  14. Hank Lema says:

    “Government confusion at it’s best!” If you buy a 8oz bottle water at the market they charge $1 per bottle works out to $8 d0llars a gallon. If you pay 50 cents a bottle it works out to $4 dollars a gallon….What gas is cheaper than water? Do the Math.

    • Brian Driscoll says:

      This argument is just dumb,dumb,dumb. If you used 5 gallons of water to get to work everyday you would freak out about it. Big deal I saw a comparison between white out and gas making it like $25 a gallon. It would take me 40 years to use that up. 1 gallon of gas>19 miles>20 minutes. Bottled water isn’t used in every factor of commerce to produce and get goods to market like gas. So when someone is gouging people I have an issue.

      • The Omega says:

        Water is used in every factor of commerce to produce and get goods to market like gas.
        70 gallons of water to produce 1 gallon of gas
        4 gallons to grow a tomato.
        All the products we have use water.

        • Joshua Felt says:

          Omega- You provide a great argument. But it’s the wrong one.

          “Bottled water” is NOT used in every factor of commerce. The city of Austin charges a flat rate of $2.00 for up to 2,000 gallons. And thus, any argument comparing the cost of water to the cost of gas for the purpose of justifying the cost of gas is nothing short of ridiculous. The distinction of bottled vs tap is very important in this case. Ignoring the distinction moves the decimal at least three places.

  15. Christopher McDaniel says:

    No one wants to talk about the continuing devaluation of the U.S. Dollar that is causing gas to become more expensive? Keep following Oil Companies and their reasons, and you’ll keep running this country into the tar pits!

  16. Fred Altland says:

    If the gasoline industry would follow the law of supply and demand gas prices right now would be falling not rising. With the high gas prices people have changed the way they are traveling. They are riding the bus more or buying smaller cars. There has also been a rise in the purchase of 10 speed bikes. But the gas price keep rising. Remember in December of 2008 when in Pa the pump prices were $1.49 a gallon? Well rbob gasoline was trading for around .95 cents a gallon. The gas was trading on NYMEX which is now apart of CME Group. Sheetz owned 335 stores in 2008. Today they own 412 store and counting. 335 stores gets you a lot of gas. In a AP article dated July 7, 2011 Big Plans ahead for Sheetz. In the article it states the following. About 75 percent of the company’s $4.9 billion in revenue come from gasoline sales. They go on to say that the national average for profit is 15 cents a gallon. Sheetz claims to make less than that because the way they market the gasoline. Bill Shipley of Shipley Energy just purchase a part of the York Baseball team. Most of their fuel tankers are new or have new paint jobs. Shipley Energy actually aired a ad durning this years Super Bowl. Yes they only make a couple pennies per… read more »

    …gallon. You see back in December of 2008 Sheetz, Giant Food (Ahold USA) and Turkey Hill (Kroger Foods) all purchased millions of gallons of gas when it was low like back in December of 2008. How do you think Sheetz built 77 stores in bad times? Those who use Turkey Hill Minit Markets have to understand that their parent company is Kroger. If you have a Turkey Hill rewards card just read the back of it. It says this card is the property of Kroger. If you get a $200 gift card from Turkey Hill you can go to Littman Jewelery store and purchase some ear rings with your Turkey Hill gift card. Just look at the 24 different stores that gift card is available at. Right now I could spot purchase rbob gasoline from CME Group. It would cost you about $150,000. You see you have to purchase atleast 42,000 gallons of gas or more at a time. But you get a CONTRACT for the gasoline for 36 months. This is how Sheetz can build so many stores in 3 years. How do you think Turkey Hill built the ice cream factory tour? Kroger built it for them. They paid less than a $1 for the gasoline and they are selling it for almost $4 a gallon. Wake up people.

  17. Kendall Gray says:

    Of course, this article does not mention that the price of gasoline is beyond the ability of any one government to control or that more crude is being pumped domestically than there was before the disastrous Gulf oil spill. Demand for gasoline has declined to the point that more is being exported than imported. That hasn’t happened since the Truman administration was in office. As a result several refineries have recently closed to keep profits up for the oil companies that owned them. The biggest factor, the cost of crude, is set globally. Demand is up in Brazil, Russia,India and China. Tar sands oil is dirty, dangerous and expensive. We the people need to get as far away from fossil fuels ASAP! If you don’t like buying something don’t buy as much of it. The sneakiest way to lie is to tell only part of the truth which is what the oil companies do very well.

  18. Tim Roberts says:

    In my industry when I buy more the price goes down not up. I think we should remove oil off of the open market or regulate the speculators to only price oil based on facts and not on what could happen. I think if we either regulate them or remove them. I also believe that taking the Government taxes out would be a good thing, however the stations would remian at the same price to turn a profit.

    One thing I have noticed is companies don’t have a problem raising prices when oil goes up, however when oil goes down you don’t see such a dramatic drop. I have always wondered why.

    • Henry Pratt says:

      The reason that the price goes up immediately is the owner of the gas station has to keep in mind that they have to be able to pay for the next shipment of gasoline at the higher price. If it costs you $2.00 per gallon and the truck delivers 1000 gallons you would need $2,000 to pay for the delivery. Now the price increases to $2.25 per gallon. Your next delivery would cost an additional $250. You try to have future customers pay the additional money.

      When the price oil goes down the price of gas does not come down immediately because it does take a certain amount of time to refine the product and ship it to your gas station. The refiner may be mandated by govt. to product different blends to curb pollution or whatever the reason. They may average out the reduced costs so that no one particular set of customers gets all of the advantages.

  19. Cobra on the net says:

    lets take the numbers at face value: if 80% of cost is raw material. why not discuss the breakup of the 80%?
    This perspective treats as if oil companies are just refining & marketing companies. What an attempt to mislead !
    it will be interesting to see how much oil sourced by refineries are bought from third party sellers at the prices indicated by ‘spot’ actual delivery based trades on oil exchanges. if you are to take a definition of ‘costs’ as something actual incurred by the single enterprise that controls all its different subsidiaries, joint ventures, then one can see it is the same oil company that pumps from ground at a fraction of cost and sells it at speculative prices as a monopoly. Big Oil companies are bigger than governments when its comes to exercising monopolistic powers on their factors of production, control of supply on the face of near static demand to influence market prices. Too bad most money goes to the greedy few that hoards wealth than investing on global population.

    • Henry Pratt says:

      I guess that when an Oil company incurs costs for drilling for holes that do not produce then their costs are zero because they did not get any raw material. I am glad that you were not an instructor for any of the business classes that I took.

  20. Steve Clark says:

    Isn’t there additional money to be made by the oil companies with the byproducts realized after refining, that they again continue to sell for profit?

  21. Gui Gasso says:

    Why is there NEVER a discussion about collusion? When was the last time Exxon or any other oil company actually COMPETED for you dollars?

  22. Atomic Tickets says:

    Then why is it the gas prices in

    Venezuela 6 Cents per gallon,

    Saudi Arabia 45 Cents per gallon, Lybia 54 Cents per gallon,

    Egypt $1.13 per gallon,

    Makes NO SENSE we pay that much money for Gas, we are subsidizing Oil companies, bailing them out THEN paying a Premium

    TRUTH is we are being SCAMMED by the Goverments and Their inside DEALS !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

    • Mike Murray says:

      You forgot Mexico. All those places have nationalized their oil industry instead of letting the free market work which attracts outside investors and risk takers.. These governments also control the price of flour and basic staples or there would be riots in the street.

      Which of the countries do you want to move to? I think I’ll stay here in the good old USA with its high gasoline prices.

    • The Omega says:

      Atomic

      They make enough selling the oil high to us then subsidize their own. You pay more so their own people pay less.

      There’s a lot of speculation among everyone about the why’s, The Truth is World Governments use Oil to redistribute wealth. Take from the haves(The Developed Countries like the U.S.) & Give to the Have not.(Poor Countries.) This is only 1 product. There are many. How can they sell a medicine in say Africa to a patient for $50 dollars a year when it costs a U.S. Citizen $50 a day & it came from the same manufacturer. A deal Bill Clinton brokered & when asked if he could do the same for U.S. Citizen his response was, Well they have to make a profit. Basically they lost money on the African sale & make it up on you.

      That’s why Identical meds from the same Company can cost a fraction on the Internet from other countries verses the U.S. Something No politicians tell you. Clinton’s was a slip of the tongue. It’s all around us.

  23. Kevin Stewart says:

    Our government doesn’t ‘make’ any money on a gallon of motor fuel.
    And what are called ‘taxes’ really aren’t taxes at all, they are user fees that pay the cost of maintaining the transportation system. The more one uses the system, the more one pays for that use.
    For roads, part of these user fees are levied by the federal government for use on federally funded highways that affect interstate commerce. The last time this user fee was adjusted for inflation was 1992. Since then the cost of building and maintaining roads has risen 86%. Not only do we now need to adjust for inflation, but we need to adjust to pay the additional cost of repairs that were ‘deferred’ and now cost many times what they would have cost to repair if done early. “A stitch in time saves nine.” We have dug ourselves into such a hole that we need the federal ‘user fee’ to rise by nearly 50 cents per gallon. To do that, we must do it gradually, to not shock the economy and allow people and businesses time to plan and adjust. Something like 2 cents more per month each month for 25 months, and after that index it to inflation so we don’t get in this predicament again.
    A similar rise is necessary in the state portion of the ‘motor fuel user fee’. The amount will vary with the extent and characteristics of the highways… read more »

    …in the state. Pennsylvania for example with a large number of lane-miles, hills to climb and go around, widely varying geology, and many bridges needs another 50 cents per gallon. A flat homogenous state like Florida might need only a fraction of that amount, even less for a midwest state with few lane-miles per square mile of area.
    BUT, the good thing is that this money doesn’t go into oil company profits or to buy things made outside the US, it goes to pay American workers and supports their families and all the American businesses they patronize.

    • Henry Pratt says:

      If the money collected at the pumps labeled taxes were set aside as user fees and only used to repair and upgrade our exsisting roads your argument might make sense. The money goes into the general fund the same as the money taken out of your paycheck labeled FICA (social security). While some projects benefit everyone (Hoover Dam and Golden Gate Bridge) our elected officials use those projects in their home districts and state in order to get votes and stay in office. For many years our governments (local, state and federal) have spent more money than they have taken in which is why so many budget shortfalls and so much debt.

  24. CJ Cooper says:

    What I’m reading here is a lot of quantification, all of it good but that’s exactly what the oil companies do to ensure we continue to miss the forest for the trees. The fact remains, no matter how we may hate to admit it, that we have no control whatsoever over fuel sources, production and prices. We need to turn our backs on all this and start something new, otherwise we’ll just keep spinning our wheels while we keep paying through the nose.

    It’s time to start our own (meaning we the people’s) solution. All I’ve seen here is a lot of time and energy wasted on the oil issue. It’s time to hunker down and get serious about harnessing power from the sun and the wind. We’ve wasted too much time already, over the decades, complaining about the cost and fooling ourselves into thinking that we can change the way the mammoth oil industry functions.

    Solar panels on every house and building should be mandatory. Of course that will be a threat to the oil supply and demand process. Cry me a river. I imagine the oil tycoons will step in to grease politicians’ palms to make the panels horribly expensive but we need to remember that solar panels are an investment product, not a consumable such as oil, gasoline, etc. The same basic principle applies to windmills. I know I’m over simplifying but that’s for the sake of not writing on… read more »

    …forever here, plus you all are intelligent and can quantify all this very well. Keep in mind what happened with e-mail and the Post Office. Once we’re not dependent on government controlled products and services, then we will see a shift and decrease in the power our government, which is supposed to be of, for and by the people (you and me!), holds over us. Keep in mind what has happened over just the last decade with the U.S. Post Office because of e-mail. Perhaps the price of stamps and package delivery has gone up, but we rarely have to use these services so, in the long haul, we’re spending millions of dollars less on postal services. The internet has even saved us millions of dollars in gas expenses because we don’t have to drive to the bank or to the store half the time due to being able to take care of business on line!

    I say solar panels on every roof and a windmill in every yard, so to speak. Just think of the ripple effect that would have! Keep in mind, also, that power companies are legally required to buy back from us any excess energy we produce with our panels. So not only will we stop paying the companies for our power needs, they would have to buy from us!

    Don’t forget about electric powered vehicles. Keep in mind that the technology for this has been around for a long time. Keep in mind, also, that employing that technology would put a serious dent in the pockets of all oil related industries. If you think that the oil industries and the automotive industries aren’t greasing each other’s palms, then you are truly naive.

    Oh and there’s the issue of our environment. Weaning ourselves of the oil industry teat and employing clean natural resources to satisfy our power needs would be the right thing to do, both environmentally and as a socially responsible goal.

    Please don’t think that I’m so naive as to ignore the big picture of how this may lead to a true cleanup of government eventually, starting at the top and so forth. But, so far, it seems that all the s_ _ _ has been rolling downhill onto the shoulders of the average citizen. Personally, my shoulders have had it. If I’m going to be broke and broken then I’d rather it be for a good cause and to improve MY quality of life, as opposed to funding the already wealthy and greedy while I have no roof over my head, can’t afford to buy a vehicle and no money for decent food.

    • jeffrey slaughter says:

      So i suppose its of no concern that wind generation is primarily inverted to peak hours of the day (due to the fact that winds typically blow the strongest at night), and that solar panels still have a substantial amount of R&D before they become cost effective?

      There are some technologies out there that I believe could be game changers if scale can actually be applied; the Bloom Box and engineered petroleum (company name LS9) to name two.

      I’d love to poll this blog and find out how many people are actually involved in the marketing arm of the energy industry. And how many people actually know what goes into the “stack” of power prices, gasoline prices, crude prices and nat gas prices.

      All of these commodities have a certain economic elasticity pegged to them, and if you don’t want to be involved in the markets directly, then don’t! Go and buy your overpriced volt, shop at farmers markets, and be local. That is a viable alternative. Of course, there are adders associated with that and are still reflected in the prices you pay, but not nearly as much as one would find in the supermarket chains.

      As for me, I believe a mid to long term transition to a cng infrastructure would be immensely benificial to America. Currenlty, the nat gas market is almost purely domestic; meaning little export and no outside influence by those external entities looking to hedge dollar exposure… read more »

      …or speculating on global S&D fundamentals. In addition, LNG as a transport fuel, if I remember correctly from a recent report I read, equates to roughly $.55 per gallon. Domestic LNG wholesale distribution coupled with CNG filling stations I believe would bode well for our economy overall and could definitely spark the next wave of infrastructure build out.

      You individuals that are STILL arguing about “Bush’s alternative motives” and big bad oil need to wrap your heads around current times and issues. Is oil and gas perfect? By no means. Is it the most cost effective mode of transportation and energy creation? Absolutely. Do 99% of you hold it, or a tangent of the industry, in your 401k, pension fund, or other retirement portfolio? You bet.

      Also, it should probably be noted that back in the 70′s the leading pioneer of solar technology was a little know company by the name of Exxon Mobil. The reason they discontinued R&D in the field was primarily due to concerns that the company would hold an energy monopoly.

    • Henry Pratt says:

      You lost me at the People’s Solution. That is what communism is all about. In a free market society profits are necessary. Without them no one would be willing to risk their investment in the first place.

      Those of you who think that it is ok to take money (higher tax rates) from others because they make more than you are WRONG. You say that we should have solar and wind projects but fail to put your own money up. You always want to spend everyone else’s money.

      • Joshua Felt says:

        Democracy is also about a people’s solution. Just a different way of arriving at the solution. No need to get hung up on perceived rhetoric and semantics.

        It is only your opinion that higher tax rates are wrong. Those higher rates are taxing excess. The lower rates are taking from necessities. You take more from the rich, they buy a 250′ yacht instead of a 280′ yacht. You take more from the poor, they eat two meals a day instead of three. If America was truly an even playing field, then you could use the time tested, “become an executive too, start your own business then, work hard and go to an Ivy League school” arguments, but its not. It’s ridiculous to suggest that someone’s necessities should be valued the same as someone else’s excess. You too are wanting to spend other people’s money. Difference is, you’re wanting to spend more of the poor’s money and less of the rich’s money. The money is going to be spent. The only question is, “whose money is going to be spent?” There is something wrong here, and it isn’t graduated tax rates.

  25. rigdum funidos says:

    if we went to war for oil we would have just kept Kuwait’s while we were at it, or moved on to Baghdad the first time. just like everything else, the government wastes vaste amounts of money, including the federal gas tax: in that case, they use it for inefficient mass transit and stupid subsidies of loser “alternative fuels..” If we used our own oil and gas we could be self-sufficient in a few years [65% of our domestic energy use already comes from North america]. We would also pay a lot less for oil and gas, since we could break the cartel that is limiting supply and holding up prices. PS: there is enough for at least five generations.

  26. Bill Wilton says:

    John,
    I’m assuming, like in most Euro countries, that the cost per gallon of fuel in Italy also includes taxes that help pay for a large portion of Italy’s medical care (which is ranked second best in the world). I would have no problem paying $8.93 cents a gallon if it took the place of my + employer share of my medical insurance (totals about a $1500 a month). So let’s do the math…$8.93 is approximately $5.00 a gallon more than we are paying per gallon. I would need to use 300 gallons per month to account for what I pay (+ what my employer pays) to pay the $1500 insurance cost. I use approximately 80 gallons a month. So who has the bettor deal?

    • Henry Pratt says:

      Your math skills are suspect. If you use 80 gallons of gasoline which costs $3.50 per gallon that would be an additional $280 on top of the $1500 for insurance for a total of $1780 which would raise the price of gasoline to $10.65. What about those people that do not drive? How do you pay for their insurance?

  27. David Buller says:

    If Exxon-Mobil was mistaken in this this article — much less lied in it — they would be roasted in the mainstream media, Congress would start an investigation, and Obama would be using it in campaign speeches. Knowing that, Exxon takes great pains to be factually correct. However, I am having problems with their calculations. Of course, Exxon would include in raw material cost only the portion of the barrel that goes to gasoline, right?! Yet, $2.62 per gallon times 42 gallons equals $110 per barrel. Not only is $110 high for the price of oil, but also it doesn’t leave any allocation for other products of crude oil such as kerosene, diesel, #2 heating oil, etc. What am I missing?

    • jeffrey slaughter says:

      I agree…i tried to back into the numbers as well and I came up with the same values.

      • robert owen says:

        it’s the Fed’s rules, regulations, and taxes thats costing us so much. Just as an aside, I pay more in taxes than I do for the natural gas for my home. I pay more in taxes than what I pay for air time for my phone. I pay more in taxes than I do in electricity. These 3 bills SHOW how much the gov.’t is costing me, but what nobody sees is the cost of wood products (the “spotted owl”), the higher cost of anything and everything bought or sold in this country because of environmentalists being in control and our gov.’t wanting more and more of our money. It’s not just gas that’s rising, it’s just the most obvious.

    • Mike Murray says:

      The posted crude price is one thing, the actual delivered price to the refinery is another. The quality of the crude affects the price too.

      In a barrel of crude there are also low cost heavy hydrocarbons which are refined into lubricating oil, asphalt and tar which might be worth 25 to 50 cents a gallon and other impurities such as sulphur which are worth even less. The lighter hydrocarbons which are distilled into gasoline are worth much more. Probably, the $2.62 per gallon number is accurate.

  28. Generic Consumer says:

    The author wrote:

    “U.S. crude oil production in 2010 was 5.5 million barrels per day. But U.S. refineries processed 15.2 million barrels of oil per day – almost three times more oil than was produced in the U.S. That means U.S. refiners, like ExxonMobil, have to purchase millions of barrels of crude oil – at market prices – to produce gasoline and other products for American consumers.”

    The latter portion is somewhat deceptive. Those 15.2 million barrels of crude did not all get refined for the American gasoline consumer. Some went to other side products as pointed out in other comments. But the key fact is that the US is the largest EXPORTER of refined products in the world: a lot of that output went to other countries, not US gasoline consumers. A maybe not so tiny deception. Do we have to pull huge amounts more out of our ground for export? Our domestic needs are being met perfectly well, but as a multinational, Exxon wants to gear up to serve the Chinese and Indian middle classes. This is not evil; just don’t be deceptive about it.

    This would also be consistent with paying a lot of foreign taxes, not just on the crude, but value added taxes on the refined products.

    • The Omega says:

      The reason we sell so many refined products is we don’t need all of them. It’s all in the percentages. The U.S uses hugh amounts of liquids for fuel/transportation. This leaves us with a lot of by products we don’t need. Most countries need more by products & less fuel. They drive less miles per-capita. Populations more dense. The U.S. also imports millions of barrels of already refined gasoline. We don’t have enough refiner capacity. The U.S. has only built 1 new refinery in 30 or 40 years & that required 10 years of legal wrangling. (NOT IN MY BACKYARD SYNDROME) All other expansions have been at existing plants or improvement in efficiency at existing plants.

      Note that exported refined products include all types of chemicals & solvents for manufacturing & fertilizers. All oil products. So certain statements can be very misleading without details.

      We also export the Oil from Alaska because it’s an extremely heavy crude. Not cost effective for fuel refinement. They actually heat it up to pump it thru the pipeline even during the warm months. In turn we import lighter crude that’s more economical to refine for gasoline.

  29. Angel Mariscal says:

    This is what I don’t understand and maybe someone can shed some light. Gas skyrocketed past the $3 mark when the barrel reached past the $100 mark. Since then gas prices have dipped to somewhere around $50 a barrel and the price has not changed much. It seems the only effect the price of a barrel of oil has is when it makes the price of gas rise.

    I also don’t understand how we subsidize an industry that is already extremely profitable.

    The war in Iraq was never about oil, well, not oil for us anyway. It was about making people rich. What people and what companies benefited from this war? Companies that Cheney, Bush, and their friends had a vested interest in. Wars are about making profits, economies boom in wars.

    As Bill mentions, Europe charges an outrageous amount of taxes on their gasoline, but they get a bigger bang for their buck. Have you driven on the Autobahn? Traffic can be attrocious, but the roads are perfect. Have you driven on many U.S. roads? Pot-holes and old aging bridges. European vehicles are also more fuel efficient.

    • Ronald Wagner says:

      If you think you are paying too much wait till Obama gets in. A lot of this is inflation, which will go through the roof. Fuel prices are no longer figured in. Wonder why?

      Switch to a natural gas CNG vehicle, or have yours converted. Honda Civic, Big Three pickups, and vans. The pickups also run gasoline at the flick of a switch. Chrysler/Fiat will be bringing sedans soon. See cngprices.com for average prices about half of what you are paying.

      http://ronwagnersrants.blogspot.com Natural gas is the future of energy. It is replacing dirty, dangerous, expensive coal and nuclear plants. It is producing the electricity for electric cars. It will directly fuel cars,pickup trucks, vans, buses, long haul trucks, dump trucks, locomotives, aircraft, ships etc. It will keep us out of more useless wars, where we shed our blood and money. Here are over 1,600 recent links for you:
      https://docs.google.com/document/d/1NbaKYme3bqOw0b6KMxXSjOLHLNeflalPy9gIAiTYFMQ/edit

  30. Dennis Clinton says:

    OK all you talking heads blame it all on the officals THAT YOU ELECTED TO LEAD YOU BLINDLY. COST OF GAS? Does anyone remember basic chemistry? What is a natural bi-product of producing un-leaded gas…….Hint it starts with a D and ends with an L that right boys and girls diesel. …ask youself a question why is diesel higher than gas? Because we use more of it. Thats what industry runs on ..yes they (the oil companies) make a little money on gas but the big bucks are made on diesel fuel. Always go to the root of the problem children. That’s where the truth is.

    • The Omega says:

      Here’s the Truth…

      Fuel Taxes are substantially higher on Diesel.

      They reasoned that Big Riggs did substantially more damage to the roads then cars. The Fact that these Riggs are out there to haul product to the consumer slipped their minds.

      NO, Not really. Raising gas taxes upsets the masses. It was a back door tax on the Consumer. All passed on to us in shipping/product costs. Joe Citizen fell for it.

  31. morrie chamberlain says:

    Oh my goodness. Exxon makes a profit. Their 70,000 employees are glad they do. The CORE problem is the sorry state of education in our country. So few Americans have any clue as to economic theory.

  32. john langmaid says:

    Keystone pipeline comment is incorrect= according to recent Chicago Tribune article there are parallel pipelines under construction or finished that will connect and enlarge existing piplines which will remove the need for Keystone . AARP should do their homework and understand Keystone is a political is myth used by gridlockers for political advantage. Complete fact please!

  33. Jeff Roskam says:

    Good point Mr. Kohen; however to site negative margins at -2% in January isn’t a good indicator of historic average margins or historic HIGH margins! Let’s see some balance here! Also – for an integrated company to look at only the refining margins at -2% while 80% goes to crude doens’t tell the whole story.

  34. Jeff Roskam says:

    to cite 2% negative margins versus historic margins is spread BIG misinformation. To be a credible source of information you could site historic margins, or maybe even maximum margins. See your collegues website http://www.bp.com/sectiongenericarticle800.do?categoryId=9037176&contentId=7068620.

  35. James McCoy says:

    Question: If margins are as thin as the article leads us to believe then please explain how are oil companies posting billions in PROFITS each quarter?

    The below was copied CNNMoney article:

    By Steve Hargreaves @CNNMoney July 26, 2012: 10:50 AM ET
    NEW YORK (CNNMoney) — Exxon Mobil reported a quarterly profit of nearly $16 billion Thursday — the highest ever for a U.S. corporation.

    The number beat out the previous quarterly record of $14.83 billion set in the third quarter of 2008, also by Exxon

    • Joshua Ploman says:

      James

      Let’s not forget that the oil companies are making huge profits on diesel, marine diesel, kerosene and propane/butane/natural gas products as well.

      Gasoline is the fuel we use in most passenger cars in the US. It could be looked at as a recreation fuel. Diesel however, is an absolute necessity for heating in the northeast, shipping, trucking, aircraft (jet fuels are highly refined diesel) and railways. While we can choose not to take a trip in our gasoline powered cars, businesses who deliver goods and services must pay what the petroleum companies charge for their fuels.

  36. Ronald Wagner says:

    The natural gas equivalent of a gallon of gas is about $.82 cents. That is $1.80 less to start with. The rest of the factors might be similar. So you could save at least $1.80 per gallon equivalent.
    Of course you could save more with a special compressor that allows you to compress what comes out of your own home, even if you paid taxes.

  37. Ronald Wagner says:

    Natural gas is the future of energy. It is replacing dirty old coal plants, and dangerous expensive nuclear plants. It will fuel cars, vans, buses, locomotives, aircraft, ships, tractors, engines of all kinds. It costs far less. It will help keep us out of more useless wars, where we shed our blood and money. It lowers CO2 emissions. Over 2,400 natural gas story links on my blog. An annotated bibliography of live links, updated daily. The big picture of natural gas. https://www.ronwagnersrants.blogspot.com

  38. Joshua Ploman says:

    Mr. Cohen
    It would be nice to know how much a gallon of diesel costs. We all know that the profit margin you described for a gallon of gasoline is slim. Diesel fuel costs less to refine and yields more product per barrel of crude. It would also be important to remember that while gasoline fuels the majority of our vehicles in the U.S., diesel is what fuels the majority of logistic fleets such as OTR trucks, shipping, and railways. Looking at the difference in the price of diesel vs. gasoline at the pump – it would seem that you are making a HUGE profit on diesel. Would you please explain this for us in the same manner as this great article on the price of a gallon of gasoline? Thanks in advance!

  39. Conrad Jelinger says:

    If the planet was on a “Gold” standard, 5% of what is written here would have meaning. The global standard for currency is “Black Gold” (Oil). Politics make for great Hollywood movies, but reality is so much more boring. What are the underpinnings of the American currency? If your answer is “Full faith and credit……”, please go for a private education and learn the difference between fact and fiction.

    As for those of you who say “It’s all about oil and money”, you’re right it is, get over it. Unless you live on a tropical island where coconuts and bananas drop from the trees, you need oil to survive. It comes down to risk and reward, class and class envy.

    If all you can do is protest, you are part of the problem, never the solution. The folks that make it a better world are those that walk their talk. So my question to the great majority of respondents here is: (tada… you knew this was comming) are you part of the problem, or part of the solution?

  40. John Assal says:

    Government waste and crude-supply are real issues but are nowhere near primary at this time. Depending on where you live the affect of ’boutique’ formulations have a bigger effect on production and cost, of course these areas are by far the most plagued by smog as well.

    The real issue is speculation. look at the cost of crude just after 9/11 and just after the financial melt-down. Yes, demand slumped but there was an immediate return to prices from before the Gulf War. The FIRST one.

    The other costs are either a direct percentage (taxes) or a somewhat looser percentage basis, as with marketing (nobody spends $1 per gallon on marketing but at $25/gallon at the pump everyone would.)

    Bottom line is that the retail on gasoline will be 25% above the cost the refineries pay for crude, so unless you personally happen to make your money by bidding up the price of crude then you really ought to stop whining about taxes or exploration -and about Wars too- and just put a stop to the speculation.

    Unless, that is, you think an automatic 70% increase in cost on *everything* is somehow a good thing.

  41. S M says:

    Many thanks to Exxon Mobile for the insights on their noble efforts.

    Next up: Why Empire Is Good For Democracy followed by How Sound An Investment Are Buggy Whips?

    Oh by the way, can somebody please remind them to pay their corporate taxes for a change? Maybe they could use the generous taxpayer subsidies to do that.

  42. Joel Gallob says:

    Does Exxon really have no budget for R&D? Or for exploration drilling? Nor ever make a profit? Nor set aside money for contingencies. Nor legal fees for those contingencies? This math is not credible. Try again.

  43. tony wise says:

    “You can just dismiss a fact of life because it doesn’t jive with your predetermined political view” thats funny because youu sure did dismiss a number of things becauseof your own predetermined political view..like the fact that saddam actually DID use womds on his own people and on his neighbors, something gadaffy never did, yet obama went to war with him and removed him. you dismiss the fact that obama himself said saddam was adanger and that the world would be better off without him. you dismiss the fact that demorats were full participants in the iraq war,. you act like bush pulled an obama and went to war without congressional approval..he didnt. . and dont give me that bad intel crud unless you are ready to tell me why bill clinton said even after he left office that it was a fact that saddam had womds….where did bushes bad intel originate? i would say the former president who told both him ad the world that it was an “incontestable fact” that saddam had them when he left office. i sure get tired of seeing people blame an entire war on one man. very small minded and historically untrue. if there was a lie, it was told by both sides, not just one. but i do note that the last womd inspector said in his report that there was sufficient evidence to merit an investigation int saddams womds being moved into syria, but that inestigation… read more »

    …never took place, and we know for a fact that today syria does poesess womds from iraq. your war for oil is a talking point. we barely got any deals out of it, and bush put oil profits in a trust fund for the iraqi government, when he was in fact entitled to it by the laws of war to recompense america for its investment in removing a brutal dictator. maybe you need a bit more fox news and a bit less of ots counterpart, msnbc. by the way, i also note that obama lied about ending the iraq war, that we are still spending and wasting billions, and occupying the country with mercenarties instead of combat troops.

    • Lusik H says:

      It’s good to see that people are not forgetting what the Bush administration did to our country, we should not forget so people like that do not get put into that office again. If it ever happens again our country may not survive.
      Juhasz, author of the books The Tyranny of Oil and The Bush Agenda, said that while US and
      other western oil companies have not yet received all they had hoped the US-led invasion of Iraq would bring them, “They’ve certainly done quite well for themselves, landing production contracts for some of the world’s largest remaining oil fields under some of the world’s most lucrative terms.”

  44. R Brown says:

    All the commentary carry valid points of varying degrees. But, as with the national debt, the focus on finance has not changed much since the beginning. Instead of a primary dependence on the collections of tariffs, as in the time of Lincoln, our country invites the purchase of T-bills from foreign governments. As long as we keep buying foreign products (oil), our Treasury will continue to “re-patriate” the dollars held by those governments in exchange for them loaning us money. Now, would this help explain how government can continue to operate in spite of the IRS only collecting 1/3 of the amount spent? This is only one of the reasons for the purchase of foreign oil, instead of domestic drilling. The Washington pundits want us to believe it has to do with domestic “environmental concerns.” It is typical, and mostly ignored, but just “follow the money.” It is not the big, bad oil companies. In fact, the oil companies have had to buy their raw materials with dollars that have been devalued by at least half. Does that help explain why the price of gasoline has doubled since Bush left office. And,while we are at it, the “fiscal cliff” will present our country with another major reason for the dollar to be devalued even more. Had enough, yet? How about even more self-induced inflation and unemployment because of our ability to just print more money?

  45. p m says:

    this is a bunch of BS! If all this were true about costs, then please explain why each and every year they have record breaking profits. The explanation for the price of gas is simple…GREED. Top CEO’s are receiving larger and larger bonus’s every year while they suck up OUR TAX DOLLARS in “entitlements” or subsidies they dont need. I’m sick of paying my tax dollars to oil companies that dont need it while we have more domestic oil produced every year than we have had in over 50 years and they are making larger profits than ever in history. They buy up their own stock and oil futures to make an articifical shortage and them make triple profits over again. Meanwhile the American tax payer pays them to do it while they support politician who want to cut our entitlements..ie social security which we actually paid into! Its criminal. Anyone who believes this crap about how they justify the price of gas needs a reality check. The price of gas is what it is because they make it that way to make 300% profits in one single year and your tax dollars pay for it. Its not because of how much we do or dont refine. Its not because of the President. Its because of GREED in the oil industry and politicians they have bought and paid for to defend the subsidies they dont need and we pay for. Check the facts…http://www.americanprogress.org/issues/green/news/2012/02/07/11145/big-oils-banner-year/

  46. Alan Silverberg says:

    Interesting how ExxonMobil loses 7 cents per gallon, and the entire process of getting the gas from the refinery to my car, including all costs and profit, is only 33 cents. I find that very hard to believe considering that ExxonMobil is one of the most profitable companies in the world, and considering that prices between low and high priced gas stations in the same area can differ by 20 cents per gallon or more. Even if the refiners did lose money during December 2011 due to market factors, overall they make huge sums of money. I suspect that the writer picked one of their worst months and is being disingenuous. Why not use a 3 year average to get a more accurate picture? Why not go into some more detail on the profits so we can see what is really going on?

    Instead of giving us a true and honest picture, the writer uses this article as an opportunity to promote the destruction of our environment by producing more oil domestically, totally ignoring the much better choices of alternative cleaner energy sources, and increased fuel efficiency. He ignores mentioning these because this reduces the profits of the giant conglomerate he shills for. This corporate shill talks about politics interfering with what his company wants to do, but that is a good thing. Big oil has shown that they can’t produce oil in a safe manner, as we’ve seen from what happened with… read more »

    …ExxonMobil’s Valdeez oil spill destroying the environment in Alaska, as well as the more recent BP oil spill. We already have a global warming problem that is going to get much worse no matter what we do, but the situation will be far worse than predicted if all we do is increase drilling, not to mention the fact that our oil supply is eventually going to run out and that will force us to look for other energy sources.

    It would be nice if one of these giant evil corporations would just be honest and admit that they are a bunch of crooks and a menace to society, even if they produce a product that we all need, at least for the time being.

  47. Sue Horning says:

    What are the profits each barrel of crude produces in the form of diesel and propane?

  48. Adam Hall says:

    so in this math, where does the $10 BILLION in profit over the first 9 months of 2012 come from?

  49. Barbie Berg says:

    This article tries to make it seem as though refineries aren’t making very much money producing gasoline. It fails to mention that gasoline is only one product produced from the process. One barrel (42 US gal) of crude oil produces something like 15 gallons of gasoline, 9 gal. of fuel oil (See Gasoil / D2), 10 gal. of jet fuel (Kerosene) and 4 gal of other “heavy” products such as lubricants, grease, asphalt / bitumene and plastics and 4 gallons of lighter condensates/naphtha. I’d say refineries make to much money!

    • tim schultz says:

      Barbie,

      I’d say your father makes too much money.
      I’d say your cousin makes too much money.
      You fail to realize the more they make , the more they
      are taxed and the more govt can repair roads and work on infrastructure, but of course if you look at someone like the
      decision makers in La. who spent fed money on things other than what they should have i.e. levy repair and such, than you might believe that extra collected in taxes is wasted anyway.
      Oh ya, Mayor Nagin is indicted for misusing his office to get
      kickbacks and such after claiming the feds didn’t do enough
      before the storm. Bigger govt means bigger levels of corruption
      always was that way and always will be.

  50. rosemary piedra says:

    I wonder how many of you either smoke cigarettes or drink Star Bucks coffee and pay the price willingly? Their Costa Rican specialty coffee costs about seven dollars per cup … the equivalent of more than two gallons of gasoline. I never hear the media or anyone else for that matter; discuss the fact that they are gauging the American public. You know why because people are willing to pay it. It all comes down to supply and demand.

  51. Richard Dunn says:

    What’s scary is the lack of efficient use of those taxes collected at the pump.

    • Byron Alexander says:

      Worse yet is that those taxes are likely not enough to offset the cost of the Iraq misadventure or the huge standing military that we keep in place to secure the oil. The true cost of oil is in the huge defense budget and our killed and wounded brave soldiers.

      • James McKelvey says:

        We did not go to war in Iraq for oil so get off that talking point. The problem is we have significatn raw materials in the ground in our won country and a Dem congress and Dem President won’t let us get it. Why are se spending billions in bailout funds for bankrupt unproven green energy companies and ignoring the vast amounts of natural gas we own and could be using as a fuel source.

        The problem is government.

        • Brian Kemp says:

          You can just dismiss a fact of life because it doesn’t jive with your predetermined political view. If we didn’t go to Iraq for oil, then why did we? WMDs didn’t exist, and we knew it. Colin Powell knew it, Karl Rove knew it, and they sold us a lie. So it wasn’t WMDs. It wasn’t to fight Al Qaeda. It is well accepted (outside of the Fox News circle) that Al Qaeda was not present in Iraq until we created a power vaccum by invading. So it wasn’t some anti-terrorism strategy. It wasn’t some idealistic human either. If it was, why Iraq and not Tibet? Sudan? Because they didn’t have natural resources for a VP’s corporate cronies to make a buck off of.

          So it’s not a talking point, James. It’s a fact that we went into Iraq and spent billions and killed off thousands of our youth to give us better control of an oil resource.

          The problem is indeed government. A neo-conservative government that has put into debt that we will probably never pay off. A neo-conservative government that you choose to defend because of some silly anti- Democratic mindset.

        • David Gatlin says:

          Hey Brian. Why do suppose Bush, Rove, et al didn’t just lie and say they found weapons of mass destruction? They had to know that their lie would be found out eventually. Why not have a plan for it? Even more amazing is that they were able to get Clinton to go along with their WMD lie years before they even took power. Remember that? Best president ever Bill Clinton bombed Iraq over WMDs. By the way, if we went to war for oil, when is that oil scheduled to be transferred? Because I’m sick of these prices and last I checked we were still paying for oil on the market.

        • George Hilbert says:

          “The problem is government.” Think about it. When the U.S. military goes into a country shooting and blowing stuff up, what happens? The answer is a huge amount of expensive military equipment is used up and must be replaced. Same for ammunition. This stuff does not come for free. The military suppliers make gigantic profits that are not made during peacetime.

          No money is made in the medical treatment of the wounded soldiers, therefore the horror stories of the poor treatment of our soldiers by the Veterans Administration hospitals, which the govt wants to close to save money.

        • Lisa Stevens says:

          Why else are we in the middle east? What National Interest does it serve other than oil? Think about it. There are Southern and Central African countries with vast natural resources that our military industrial complex doesn’t require to protect this country. Once we are off of oil for transportation as well as the rest of the world, there will be no need to meddle in the Middle East other than in countries like Egypt because of the Suez. But even the Suez will lose importance after the oil dependency is gone. That being said we still need substantial amounts of oil to produce things … but just like in the Roman days, wars were fought over salt because it was the only way to preserve food … until a substitute was found.

        • The Omega says:

          We went to war in Iraq to keep the price of Oil stable for world economics. Everyone, not just for the U.S.

          Oil is a World commodity no matter were it is from. Wold market sets the price. Even here.

          When Oil goes up, everything goes up. Food costs are directly related to Oil cost.

        • Donald Garretson says:

          The price of crude oil goes up for one reason only: to increase profit. Gasoline is on its way out and the shareholders are looking to make as much money from it as they can before the bottom drops out on them.
          Demand is down, it is cheaper to pump out and refine, yet the price goes up.
          Gasoline is a waste product from the refining of crude oil. It is produce from distilling other products. Gasoline is not a main product from the distillation of crude oil.
          Until the invention of the internal combustion engine, gasoline was a waste product that was burned off because there was no use for it.
          Even with the World economy, there isn’t a legitimate reason gasoline costs more than a dollar per gallon in the US, except greed.
          Because of the increase of plastics production in the US alone, we have an abundance of gasoline (a waste product from making the raw plastic material out of crude oil), and that’s why even though over all production is down, there isn’t a gasoline shortage happening in the US or the World.

          The reason Mr. Cohen can honestly say 80% of the cost of “producing” gasoline is the crude oil is because the yield is so small comparatively. There would be a huge waste of raw material if you were to actually make gasoline a main product instead of a by-product of refining.

        • James Henderson says:

          Really? I wonder if we would have gone to war if Iraq’s major export were broccoli (Bush’s favorite)?

        • Barbie Berg says:

          I agree – the government is the problem- However you are naive to believe that oil is not the reason we went to Iraq! Do the math, if you did any research you’d find that our government has already admitted to it! (FYI to everyone: WMDs were found- they were the one our government gave Iraq! I know some of the soldiers that found them. Our government didn’t want the public to know it was ours!)

        • ron Lewis says:

          Brian Kemp says: “You can just dismiss a fact of life because it doesn’t jive with your predetermined political view,” and then proceeds to invent a non-fact that jives with his predetermined political view: “WMDs didn’t exist, and we knew it.”

          And more hyperpartisan idiocy, right after decrying hyperpartisan idiocy: “It is well accepted (outside of the Fox News circle) that Al Qaeda was not present in Iraq until we created a power vaccum by invading. So it wasn’t some anti-terrorism strategy.”

          I seriously believe Brian doesn’t even realize that he’s a biased propagandist? His entire post is partisan screed. He’s the guy with dog poop on his shoe accusing others of farting.

          SMH People like Brian are why I know this country is doomed.

        • Jorge Saucedo says:

          What is the matter with you all Republicans? what did we get to Iran for if it was not for the OIL?
          The profile of the republican:
          Ignorant, arrogant, out of touch with the real world, emotions dictate their lives, cannot think for themselves, easily irritated.
          pushy and cannot compromise, it is their way or nothing, religiously and very devoted usually Christian, their heats full of hate to minorities, gays, free thinking women, non practical at all,opinionated, and their world only exists on their terms, no other religion is accepted.
          DO NOT FORGET, WE HAD A SURPLUS OF MONEY BEFORE THE PUPPET OF BUSH TOOK OVER.
          THE DEMS KNOW WHAT THEY ARE DOING, MEANWHILE TO BAD LOBOTOMY FARMS ARE OUT LAWED.

        • hepster gump says:

          dont be silly james , of course the iraq war was about oil , power, and greed .

        • Rick Olson says:

          Colin Powell still says, contrary to the propaganda from the left, that we went into Iraq because of the intelligence reports that said there were WMD. The faulty intelligence was thoroughly documeted in the bipartisan Congressional report titled, The Commission On the Intelligence Capabilities of the United States Regarding Weapons of Mass Destruction–it’s easily found on the internet. If Bush had lied Pelosi would have impeached him. She took this option off the table because she knew this report would exonerate him.

      • s o says:

        your response hit the mark! great reply which many people don’t know… no blood for oil..

      • Marc A. says:

        Most U.S. oil comes from Canada, Mexico, and Venezuela; out of those three, only Venezuela is a member of OPEC. After the 1973 oil embargo, it was determined that most U.S. oil imports should come from the western hemisphere. Saudi Arabia is the leading Middle Eastern exporter of oil to the U.S..

        There is no evidence, other than opinion, wives tales, and hysteria, that America has been taking oil from Iraq. Iraq has one of the largest reservoirs of petroleum in the world, but most, if not all of it, will be exported to Europe, Asia, and Africa. Why? Because transporting oil is expensive, so the shorter distance it is transported, the less expensive it will be.

        Democrats said the same thing that President Bush said about Iraqi WMD; the only difference is that they did not send an invasion force. If President Bush lied, then so did Sen. Clinton, Sen. Kerry, VP Gore, and others; no one has ever accused them of “lying.”

        The U.N. and U.S. chief weapons inspectors both wrote the same thing in their final WMD reports about Iraq. They both wrote that AT THIS TIME, they did not find WMD stockpiles in Iraq, but they did find evidence of WMD production programs that were being concealed from U.N. weapons inspectors. They both believed that these WMD programs would have been restarted when the U.N. sanctions were lifted, something which France, Germany, China, and Russia were asking for. Why were they asking for it? Because Iraq has… read more »

        …such large supply of OIL, that they wanted to open its market up both for the benefit of their OIL COMPANIES, but also to help stabilize the world oil market, which Europe, Africa, Asia, Australia/New Zealand, South America, and North America are dependent on.

        President Bush was president of the U.S., but not of France, Germany, China, or Russia, and certainly not president of every continent. Oil is like wheat, corn, soy, beef, pork, and other commodities: people all over the world use it because it is the most efficient and CHEAPEST source of energy. Green energy is MORE expensive than oil and is LESS efficient; that is why no liberal democrat billionaire, such as Bill Gates or Warren Buffett has built a car that runs on any “alternative” fuel.

        We get all the lectures from the “green” crowd about the wonders of alternative energy, but they cannot build a car that is the same price as a gasoline or diesel car or that is less expensive to fuel. All they can do is spout off about conspiracy theories that are proven wrong when electric cars come to market, full of tax breaks and built by government run American auto companies, and the average consumer either cannot afford to buy them or does not want to go through the trouble of driving and recharging one. The I Phone is popular; the electric car is not.

        Oil is LESS expensive than electric powered vehicles at this time; perhaps one day that will change, and then the market will reward the more efficient one. But “green” people cannot tolerate the idea that consumers, primarily the middle class, including minorities, single mothers, and the elderly, are allowed to make their own choices in life, so they want to use the government to make those choices for them, ie: fascism.

        Oil beats all other fuels, unless a fascist state can cause enough market dislocations to drive the price of oil so high, that a more expensive and less efficient fuel can become attractive to consumers. It is government energy policy that drives up the price of gasoline, by affecting the supply. Even today, the government makes 39 cents per gallon of gasoline, while oil companies make only 7 or 8 cents per gallon.

        The green energy movement is based on politics, not on science or economics; it can only be successful through centralized energy policy and fascism. If alternative energy is more expensive than traditional sources, the public will choose the latter, unless the government can either force the price of oil higher or force people not to use it.

        But there has never been one shred of evidence that the U.S. went to war in Iraq in order to see more oil shipped to Europe, Asia, and Africa; none.

      • Fred Bartlett says:

        At what point in this conflict did IRAQ leave OPEC and fall instead under the control of the US? America is absolutely terrible at this whole ‘blood for oil’ thing, if we forgot to rip Iraq out of OPEC…

    • Mark Young says:

      BTW Brian; Do you still think the Muslim Brotherhood and Al Queida didn’t show up until after Egypt and Libya were attacked by Obama (without consent of Congress like Bush did in Iraq). ANd we see form teh hte latest in Egypt this week and libya the alst few weeks what Obama’s actions did to further de-stabilize and tilts the Mideast toward Muslim extremist domination, which is what he wanted. Not helping Iran when not once, but twice, they pleaded for help from the Muslim extremists and Obama did NOTHING!

    • rosemary piedra says:

      I agree where is all the money they collect? It is suppose to help rebuild our roads and bridges. I bet it is missed managed by our bureaucrats, as usual.

    • Dan Nelson says:

      “The cost of the raw materials used to make a product has a major impact on the final product price”

      LOL..!! Yup and thats why all the major Oil company manipulate the market to artificially increase Yeah Richard it’s the taxes hat are the problem LOL.!!

      If you really want to know why oil is so expensive Just Google “ICE” or Intercontinental exchange..

      ICE is a very special club that works like a members only Stock Exchange for oil. It’s only members are Morgan Stanly, Goldman Sachs and every large oil company in the world..

      Heres how ICE members screw consumers by artificial manipulate the price of oil..

      For example say Ice wants to raise the cost of oil 5 dollars a barrel on the open market. What they will do is Exxon will sell a few 100 million barrels of oil to Shell for say $5 a barrel over market value. Two days later Shell Sells Exxon back the same oil for the same price ( It was just a loan.. LOL…!!)

      Now they continually keep selling this same oil back and forth to each other at ever increasing prices. What this does is artificially drive up the cost of oil on the open market and it has nothing to do with real market value of oil. It’s all nothing more then unethical market manipulation, which explains why Morgan Stanly, Goldman Sachs are members as they are the defacto kings of screwing consumers… read more »

      …through unethical market manipulation .

      Unethical Artificial manipulation of oil prices costs the average Tax payer a few 1000 percent more every year then they pay in tax’s.. This works nicely because they consumers are kept distracted with the red herring known as taxes which keeps them from noticing the ass raping the the oil companies are giving them..

      The simple fact is if it wasn’t for ICE unethically manipulating the market price of oil, gas at the pumps would still be under a dollar a gallon. But hey keep on worrying about that 12 percent in taxes, Morgan Stanly, Goldman Sachs and big oil loves it when consumers are distracted which kinda explains the motivation for BS in this article..

  52. James West says:

    There are so many facts that are NOT revealed in this article as to make it sound like a political campaign oratory!
    For the first and major fact not addressed, is the fact that gasoline is only one of the products extracted from raw petroleum. If gasoline is the only product sold from all the products extracted, then this article makes sense. However, we all know that is not the case.

    If the market price for ALL of the extracted products is factored in, then it reveals quite a different picture as to the TRUE cost of the gasoline as it arrives at the local pump.

    I challenge you to write an accurate article which reveals the TRUE cost of gasoline at the pump. As this article would suggest, there is no contributing profit from the sale of ALL the other extracted products, that gasoline bears the entire cost of the raw material.

    Come on guys, we aren’t morons here! We deserve the whole TRUTH, not the same old rhetoric we hear from every other source…!!

    • James Wheeler says:

      Hello, James West,
      When computing the cost of any product, whether gasoline, shoes, or doughnuts, the numbers used always relate to that product and that product only.
      To factor in costs related to other products would totally distort the picture and would be meaningless.
      I view Mr. Cohen’s comments to be straightforward and informative.
      Have a great day!

      • Chris O'Brien says:

        So apparently Vaseline is free, not just a disposable waste product of refining?

      • Gary Lease says:

        Where do we get propane? Is it a byproduct of crude oil made during the refining process of gasoline for our cars? If this were, true why do we pay 3-4 dollars per gallon? If this was true how much profit is in this byproduct? Lets add this into the mix.

        • The Omega says:

          The $2.62 is based on the 40 gallons of oil. About 10% of oil is burned off as steam.H2O
          About 20 Gallons Average of the barrel is Gasoline. Different Oil grades very. The By products absorb the same $2.62 per Gallon. Otherwise the 20 gallon of gasoline would be calculated at $5.24 a gallon.

        • Micky Baker says:

          It’s really pretty simple. At the cost of $2.62, a barrel of crude oil would cost $110.04 not counting the cost to transport it via ship to refineries. Only about 20 gallons of gasoline comes from a 42 gallon barrel of crude oil. Selling the gasoline only would result in in about $60 to $80 in sales, not enough to pay for the crude oil is it? The by-products, Diesel, propane, Jet Fuel, Aviation Gasoline, Motor Oil, and the other uses of petroleum come from the rest of it. When it comes down to it, the gross margin for the refiner is extremely low, less than 20% for every gallon of gasoline they sell. The rest is described in the article. The price you pay at the pump includes taxes that they are required to collect(so you blame the retailer or the refiner for that as well).

          It is time to start using logic, not emotions.

    • Bill Kilgore says:

      “Come on guys…” yourself. Get a copy of their financial statement and do a little homework. In the 3rd quarter report they indicate Income Before Tax of 18.68 bil. After Tax Net Income is 10.33 bil. That’s 43% taxes on the corporation on top of of what they show here. Relocate to Canada, like Tim Horton did, and their corporate taxes would be 15%. Add in having to pay the union boys sweeping the floor $60 an hour in wages and benefits and threats from the likes of Hillary Clinton(!) to take ALL their profit to subsidize wind mills and moonshine.
      Is there any question why American companies move off-shore? Why our TRUE un-employment is upwards of 20%.
      “Come on guys…” indeed!

      Bill Kilgore

      • Tuck Smith says:

        Come on, yourself. All those taxes you’re complaining about –went to OTHER countries. Not to the US. From a 2010 Forbes article, “What the financial statement says is that ExxonMobil, in 2009, after a handful of deferrals, recorded a total U.S. income tax benefit (i.e., a refund) of $46 million. Next to this, it shows total non-U.S. income taxes of $15.165 billion.”
        So, before your next rant about all those “evul” US taxes those “poor” corporations have to pay, how about doing your OWN homework?
        Sheesh.

        • James McKelvey says:

          Hey Tuc, if we could drill in our own country perhaps the business tax revenue would show an appropriate growth rate. It matches the controlled/regulated market they are in.

        • The Omega says:

          Those deferrals are income from other countries. It’s deferred until the income is repatriated to the U.S. If that money is spent in the Country earned, then Tax is not applicable. It falls under that Countries tax code,
          Earned income in other countries pay around 25% tax average. If the profits are repatriated to the U.S. which has a 35% tax, then the difference has to be paid. An Additional 10%.
          One thing most people don’t understand is that Corporations don’t really pay Tax. They Collect it for the Government. It’s all figured into the price.
          Don’t believe me, start your own business. Figure materials labor & all other expense which include taxes, Fed, State, Local, Then add your markup. Anything other then this equals Going Broke.
          Also when Politicians rattle off the profit, They omit the fact that for Oil companies, about 75% of profits come from outside the U.S. & the taxes already paid. It’s very deceiving.

          Try this. Go to work for a year in another Country. Pay all your taxes required in that Country. Then Come Home. You may be responsible for additional taxes when you get here. Also as an Individual, you get no deferral. And if your married to a foreigner born & raised their, They also may be tax liable.
          There’s been Foreign relation problems over this. They want to know what the Hail were doing trying to tax their citizens.

          They could say the same about the Oil Companies as most of the big boys are Foreign owned…. read more »

          …They actually only owe taxes on the Money earned in the U.S. Not what they earn abroad.

      • p s says:

        60 bucks for sweeping floor sounds high, untill you look at ceo pay thats 77519. bucks per hour

      • Carrol Kessens says:

        Bill, there is a difference in accounting for income tax and actually paying for income tax. If you did a little homework, then you would realize that they did not pay 43% income tax. Look at the increase in Deferred tax. In the deferred tax account, you will find items that are in the accounting for income tax that they are not actually paying in income tax. This account for Exxon has more than doubled in the last 4 years.

        • David Buller says:

          Tuck, I do not think you have a good handle on financial statements. OIl companiese are paying in huge levels of taxes — more than other industries. (And no one has been able to point to a tax break going to oil companies that is not also given to other companies in the IRS code.) Compare the taxes paid by oil companies to the give-away that the Administration is making to its friends and political allies!

      • Michael Shepard says:

        When we add the lack of logging here in NW Montana..our un-employment rate is nearer 25% plus.., not adding those who quit searching for nothing sad..that is why we need our hemsipheres oil. nat gas and other resources used

      • David Creighton says:

        You know you hear this Corporate Tax argument alot. The rate is 35% & they get subsidies so they aren’t paying 43%. Maybe they did something that quarter to shift around the profit. The real people that get screwed with Corporate Tax are retail outlets, but anyways you do realize that is just 1 company making more in a year than our Homeland Security budget and almost half as much as China’s entire defense budget.

        If you want to cut corporate tax fine. Take it down to 15%, but stop giving tax breaks for anything and make Capital Gains & Carried Interest be considered Income like they should be and not taxed at a lower rate.

        Another thing why does this XL Pipeline thing have to run the whole way through the breadbasket of the USA. Wouldn’t it be better to put a refinery on like Lake Michigan. That way we would be more likely to actually have an increase in supply as opposed to if you pump it down to Texas where it just gets sold on the World Market?

        • Paul Hillman says:

          David,
          ” do realize that is just 1 company making more in a year than. . .”

          It not the total income amount to get upset about, they have cost, risk, etc to be compensated. If you want to get angry about corporate greed, look at those companies with fat margins.

        • Generic Consumer says:

          The reason they want to pipe it to Houston instead of refining on Lake Michigan, is because the refined products are mostly going to be EXPORTED. See my more extensive comment farther down on this.

        • Mike Murray says:

          Regarding your question on the XL pipeline there are many refineries already built on the Gulf coast which have excess capacity. I think all the crude would be refined there instead of being shipped out – that’s like taking coal to Newcastle. Refined product, however, might be shipped out.

          To build a new refinery on Lake Michigan might take five to ten years even if you could get permission with all the environmental studies, lawsuits, special interest opposition, etc. Who wants a big refinery in their back yard? I think you would see peace in the Middle East before you would see a new refinery on built on Lake Michigan.

      • jack bonde says:

        Bill,
        That response is plain silly. I don’t see any price reduction on any non union car here in the states. The companies move to increase profits and still charge the same price. I bet you also believe on the temporary tax idea too!

      • max barry says:

        Mistatement and hyperbole. Union janitors don’t earn $60 dollars an hour but top executives make about $2000 an hour.
        And if you claim they are working so much harder, how can you explain their average life expectancy is much older than laborers?

        • Micky Baker says:

          Here we go with blaming the “top executives” on a company that has $350 billion in sales per year and sells millions of cars per year. So, you take the CEO’s salary, and cut it by $9 million to 1 million and divided that by the number of cars they sell, 3 million. What do you get? $3 savings per car. The unions cost way more than that per car, at least $3000 or $4000 per car.

    • Richard Ray says:

      I think what Mr. West is saying is that it’s improper to include the full cost of the crude oil that goes into refining gasoline. This article does not make it clear, nor does the USEIA article cited here. Given, say 1 barrel of crude oil, some of it is refined to gasoline, some to diesel, some ends up as asphalt. To say that 100% of the cost of crude oil should be factored into the cost of gasoline is of course incorrect. However, I don’t think that this was done here either. This is a classic example of over-simplification

    • Doug Boone says:

      So James West, if you think refining is such a great business, why don’t you start your own refinery? Then you too, can stack up the big bucks. Oh wait, sorry I forgot the tree huggers will not let anyone start a new refinery these days just like they keep us from using nuclear power by covering investors in paperwork. Well alt least you could go to west Texas and buy an old existing refinery, but wait, some of those same folks will not even let you start up an existing refinery, again a reason our jobs are moving off shore. Soon we will all be like Joe Biden and be forced to take a 200 tonne government subsidize train to work each day.

    • Jack Frost says:

      James,

      Sounds like you have a handle on the issue. Not only are there several other products produced refining process but also there are several gallons of gasoline produced for each gallon of crude. I’m not sure just how many gallons it is but it’s certainly more than one.

      On the other hand, this article is credible if for no other reason it’s on the Internet. Who in their right mind would question that??

      • edd anders says:

        I’ve never heard such supidity as these posts. But Jack Frost yours is the winner.

        You claim by boiling oil you can make several gallons gasoline. And you are certain of this. Look up the 3 2 1 crack spread. That should be simple enough for you. And the diesel, heating oil and asphalt is additional? How does this work out by weight? They must add water and lots of it to get these results.

    • ron Lewis says:

      Wow. You are misguided. The article doesn’t mention the other products because it’s talking about gasoline. And nowhere does it claim that the crude oil cost it cites is the cost for crude used for all the products extracted from crude as you assume.

      Any open-minded non-zealot would logically conclude that the crude cost it cites is the cost for only that percentage of crude attributable to gasoline, exactly as the article states. If you had better reading comprehension skills, you’d understand from that last sentence why you don’t reach that logical conclusion. (hint: think “close-minded zealot”)

      But why does your paranoia stop with the crude cost? why aren’t you also suggesting that the manufacturers also make more products, so their cost is misrepresented? And the retailers also have other products shipped to them, so why don’t you think those costs are misrepresented? ditto with the taxes – you know the government taxes other products from crude, why aren’t those costs deducted from the amount cited?

      Do you even realize how silly you sound?

  53. C. Gates says:

    “…two examples of U.S. political decisions that serve to keep supplies out of the market….”
    Artificial supply constraints, imposed by government, are the biggest factor in per gallon ‘pain’ to consumers. The number one (by far) prospect for significant US oil continues to be denied to proper development. +8 BilBarrels – at the least, is available at a known location – at a site set aside in the 1970′s specifically for oil exploration and production – ANWR on the north coast of the most remote location on earth- located close to a pipeline that is starving for throughput… Yet ANWR is denied to our country for fear of disturbing the sensibilities of kids who have no idea how remote, un-special and ideal a location it is for oil production. The locals want it. Alaska needs it. Caribou thrive near man-made oil facilities. Pad area for +7Bil BBLs would be about the size of Dulles AIrport in an area bigger than the State of Iowa…Absolutely nothing is unique or special in this arctic wasteland that is worthy of forcing us to buy oil from the Middle East rather than putting Americans to work providing oil from our own land. Prudhoe, a few miles to the east shipped +2milbbls/day = 20% of the US required oil per day 12 years ago. It’s now down to ~600,000bbl/d and decreasing at an increasing rate. ANWR needs to be approved for development to keep the TAPS pipeline operating. If we lose that 800… read more »

    …mile piece of nationally-critical infrastructure our options for self production in time of oil games from the middle east are greatly reduced. To those who have any concern for the environment – stand back when the country really needs to open ANWR – it will be ripped open in months rather than properly developed under the 13,241 required permits and monitoring tasks of normal modern oil-field development. Get Govt. away from artificially constraining supply! Reduce our need for foreign oil. Allow this oil field to be developed!