Commenter Judith sparked an answer from me that I thought others might be interested in…crude oil is measured in barrels but do you know what the end result of the refining process is?
It is this:
A 42 gallon barrel of oil makes between 18.5 and 19.5 gallons of gas (depending on the type of crude), the rest is separated in to heating oil, diesel and other lubricants – there is almost no waste – the rest that can’t be used as fuel goes into emulsions – like tar and asphalt.
Oil companies make about 6.2 cents per dollar of product. Your local gas station makes about 1-2 cents per gallon. On a gallon of gas at $3.00, that equates to about 18.6 cents per gallon – the federal gas tax is a flat 18.4 cents per gallon on gas and 24.4 cents per gallon on diesel and various states also tax fuel, so governments in the US make more money on a gallon of gas or diesel than the companies who produce it.
It is much worse in the UK:
The graphics below explain the costs that make up the price of a litre of unleaded at 132.9p (a pound 33, p stands for “pence”) and a litre of diesel at 137.9p so you can see who’s getting the biggest slice of the petrol pie:
1 pound 33 is about $2.10, it takes 3.8 liters to make a US gallon, so gas over here is $7.98 per gallon, since the actual product cost is about 36% of the total, gas with no tax over here would be $2.87 per gallon.
I didn’t realize: Fuel is a Sin
Seriously, I am having a really difficult time understanding how in the world the people allowed taxes on a necessary item to be so unconscientious.
How can ANYONE say with a straight face, the Energy companies make too much? Governments tax, I prefer STEAL, all this hard work, in order to give to their supporters…….
Utah, how much of the gas taxes actually go to rebuilding roads in America ?
The Governments, for the most part, really DO nothing, except steal from those that are industrious in order to give to those that do nothing. Nothing begets nothing.
It is a perfect con. The government has no costs and bears no risk of production, the tax equates to pure profit.
Texas,
You have the same racket with cigarette taxes. The govt. pretends to be working to get people to quit, but, in truth, they get too much from taxes on cigarettes to ever be able to afford to have people quit. This is why they do not make them illegal.
Check it out:
Cigarette taxes in the United States
Exxon made just under 40 billion smackeroos last year, with a profit margin of 9%. Hell, we can take another $20 billion/year from those bloodsucking weasels
But leave Valero alone, I own stock in that company
{note: I am being very sarcastic}
It would be funny – if it were not for the fact that so many people have been convinced to think that way. The sad part is, those same people have no problem with Apple having nearly $1 TRILLION in liquid assets (at least, I believe that was what was reported within the past year). Now, for as much as people scream about the oil companies “cheating” people, Apples business practices DEFINITELY do: or do you think $600 for a new release Iphone is “OK” when you know you will drop the price to $200 in a few months?
To me, this is all just an indication of the darkness of our collective hearts. As a society, we are no longer the good and decent people we once were and it shows in everything we do.
The biggest factor for oil companies is managing risk. If you look at Exxon’s balance sheet and cash flow, 40 billion sounds like a lot but one Macondo could cost all of that.
BP went from 16.7 billion in 2009 to a loss of 3.3 billion in 2010 due to the blow-out, a 20 billion dollar swing in one year.
Utha,
I do not begrudge the oil companies their profits. Rather, I condemn the government’s heavy taxation of the necessities of life. In truth, the oil companies do society a far greater service than we understand. Were it not for oil, we wouldn’t have a tree left anywhere on this continent. I wonder how that would work out?
I’m just explaining the pricing basis – this is a very expensive and risky business…not so much environmentally any more but financial risk is high.
Exxon’s cash burn rate means that 40 billion would last less than a year if that was all that they had.
I understand. Thanks, Boss. You know that you’re our “go-to” guy when it comes to anything oil
M., you drive over there, right?
Yup. Not far and often but yes…I have a midsize diesel SUV that gets about 46 mpg – but I’ve had riding lawnmowers with bigger engines.
My father-in-law owned a gas station/convienence store. A friend of my is a fuel distributor here in Marianna. Both told me numerous times that retail gasoline has little or no margin and the price at the pump is kept low to entice people into their stores to buy high-profit items (sodas, chips, cigarettes, etc.) While Utah states the federal tax of 18.4 cents per gallon (gasoline), he doesn’t mention the state and local taxes. Florida’s taxes take an additional 53.4 cents per gallon (gasoline) – which puts us in about the top 10 or 12 states in the nation on taxes.
Good point, FC. I had forgotten about State and even local taxes. I think Bay COunty adds taxes to gasoline as well.
Yup. Counties and even local municipalities get their piece of the gasoline tax pie. It’s a lot like our home (landline) telephone charges these days. Taxes (federal, state, county, city) and “access charges” now make up more than 50% of your bill.
I was aware of that. Look at all your utility bills and you’ll find more such taxes, as you will on your cable TV/internet – heck, nearly everything we do is taxed today. What boggles my mind is just how much the “poor” pay and never even realize it because they are too focused on trying to make “the rich” pay more.
If only they would realize that the only thing that ever happens is that BOTH groups end up paying more while hating each other more at the same time.
I understand that the oil companies set the price that the store pays, they only allow an 8 cent mark-up, something like that. When the price at the pump rises, the store makes the same 8 cents, no extra.
They do in company owned retail outlets but not independents. If you want to see true competition, find you a town in the middle of a price war.
Yes, let the price wars begin!
CORRECTION!! The 53.4 cents a gallon tax on gasoline includes the 18.4 cents federal tax putting Florida’s tax (state, county, local) at 35 cents per gallon. Still one of the top states for gasoline taxes in the nation. My mistake! Apologies to all.
http://www.gaspricewatch.com/web_gas_taxes.php
Do y’all believe that the majority of people, truly understand how ridiculous, how unconscionable, and how high these taxes are that the governments are charging?
I knew, forgot, and I am still appalled. Obtaining the energy is an extremely risky business. In my mind, it is a marvel of engineering that “we” are so successful in obtaining the energy, without anyone being hurt, the vast majority of the time. Additionally it appears to me to be a business marvel that companies are able to manage their business risk and continue to make a profit.
Those who “chant” the oil companies make too much are stupid or evil.
Tex, how much truth do you believe is in the rumors that the oil companies hold patents for processes that would increase mileage dramatically, but keep it under wraps, as that would hurt their profit margins? I’ve heard stories like that since I was a teen.
Not sure about Tex, but I am CONVINCED of it – because our physics professor showed us how to modify the average car carb to increase our mileage by about 20-25%. Other engineering students at the time I was in college had produced a car that pulled 50-70+ mpg with a standard 4-cylinder engine using a modified carb. Their patent was bought by GM and sat on.
But then, we can’t believe such things because…hehehe…they are “conspiracy theories.”
I had a friend who modified his Gremlin, his idea involved a fine mist of water that somehow caused a greater percentage of the fumes in a cylinder to be ignited.When he went to patent his idea, he was told that it had already been patented.
You can find the directions to do that on line. It works. It increases combustion and oxidation. We learned about that in physics class, as well.
Mel, I don’t know enough to have an opinion or your question. However:
I do KNOW, governmental regulations CURRENTLY prevent us from getting better mileage. Why else can you get diesels in Europe that get MUCH better fuel economy than in America. Same Car, different diesel engines…..
Anytime you have a product, like gasoline, that can double or triple in a year and then return to the original price within another year, the govt can add to the taxes on it and we would never realize it.