What Goes Into The Price Of Gas?

When you fill up at the pump, how much of the wallet you’re emptying goes towards the actual gas, and how much goes towards other stuff? Blogger FiveCentNickel crunched the Department of Energy numbers:

73% – Crude oil
11% – Federal and state taxes
10% – Refining costs and profits
6% – Distribution and marketing

He’s also got a cool graph showing how this ratio has changed from 2001-2008.

What Goes Into the Price of Gas? [FiveCentNickel]

(Photo: amyadoyzie)

Comments

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  1. Joafu says:

    Fricken gas

  2. Bladefist says:

    Speculation falls in there. I’ve heard from 15% to 25% can be purely based on the market. Also don’t forget about a weakened dollar.

    Gas soared this morning, anyone else notice stock market bombed? These are related.

  3. jscott73 says:

    How can taxes be greater then the price of gas per gallon? Taxes are in percentage while the price per gallon is in dollars, a little confusing but a good graph nontheless.

  4. ceez says:

    what goes into the price of gas you ask!?!?

    MY FREAKIN’ PAYCHECK THAT’S WHAT!!!!!

    argh! Pissed off x’s infinity!!!!

  5. @Bladefist: The effect of oil speculation is built into the 73%, as is the weak dollar.

  6. Wormfather says:

    Yesterday I saw a guy pan-handling at the gas station. He was either very smart or very stupid.

  7. SkokieGuy says:

    He crunched the Department of Energy number, did he?

    The same Department of Energy that met with Big Oil in close door secret meetings to determine future US Goverment energy policies?

    Gee, the numbers don’t contain any relationship to oil futures speculation. And refining costs AND profits together only explain 10% of costs? Record profits, the largest in the recorded history of the world, and COMBINED with refining costs is only f’ing percent?

    So I guess jacking oil prices when a refinery is shut down by fire or hurricane and such is totally flaming bullshit, huh?

    Distribution and marketing. So all the massive campaign contributions & all the mis-information campaigns trying to cast Global Warming as a ‘distputed’ theory. Those costs COMBINED with distribution (getting oil from the Mid-East across the ocean, getting it across the US) COMBINED is only 6%?

    This is a steaming, flaming pile of crap.

    73% – Crude oil
    11% – Federal and state taxes
    10% – Refining costs and profits
    6% – Distribution and marketing

  8. shocker says:

    “Prior to 2004, taxes actually were actually greater than the price per gallon.”

    Sorry, but you’ve misread the chart.

    The tax plot goes by the percentages to the left, whereas the price per gallon plot goes by the dollars to the right.

  9. @SkokieGuy:

    “Those costs COMBINED with distribution (getting oil from the Mid-East across the ocean, getting it across the US) COMBINED is only 6%?”

    Ummm, no. The cost of getting oil to the US gets rolled into the cost of oil. Distribution and marketing refers to *gas* not oil. And like I said above, speculation likewise gets rolled into the cost of oil because, well, it directly affects the cost of oil.

  10. SportsCentre says:

    This is why I find it hard to hate the oil companies too much. Even if they cut their profits in half (unlikely), the price of gas would only drop like 10 cents per gallon.

  11. Bladefist says:

    @fivecentnickel.com: You should have broken that out. If speculation is 15%, lets say, then thats the 2nd largest percent in your list. Also, speculation and weak dollar is what is contributing to the most of our problems today, so really it would have been more effective to highlight that, and graph it up.

  12. Wormfather says:

    @Bladefist: The US economy will not recover until Ben Bernake and Alan Greenspan are shot publicly (doesnt have to be fatal), future fed chairs must learn that bailing out Wall Street is ALWAYS a short term solution and that the benefit to WS > benefit to the American People.

    The problem is, a lot of the Feds policies are based on the idea of trickle down economics, which in fact were viable in 1988 but with globalization and the increasing demand for bigger profits, that results in trickle out economics and then wall street does one of two extremly differnt things, they either keep the cash to bolster their profit sheets or put the money right back into risky investments in hope of a big pay day.

    Now why some of the things they do will help me as a white collar worker, none of this will help blue color workers who will be hit first and hardest by any downsizing in the economy.

    I think I may have overspoke.

  13. chrispiss says:

    I’ve read that the cost of a barrel of oil is currently around $50, but that demand has pushed it to $130ish or whatever it is now. So their numbers don’t really reflect the whole story.

  14. Bladefist says:

    @SkokieGuy: You do realize the oil companies margin is quite low, and has remained the same or nearly the same for quite sometime now? I think you need to put down the tin foil hat and do some research how foreign commodities work.

  15. Wormfather says:

    Wormfather on Speculators: Anyone in the know, knows that speculation is pretty much all hedge fund managers attempting to inflate the price of crude to gain profits so that they can justify their rediculous fees.

  16. Bladefist says:

    @Wormfather: I agree. All these bail outs turn me bright red.

  17. @Bladefist: I agree that it would be great to have those numbers, but there’s no clear agreement on exactly how much of the runup in oil prices is due to a supply/demand imbalance vs. speculation (which is just another form of demand) vs. the weak dollar.

  18. ClayS says:

    @SkokieGuy:
    Why don’t you research the number of gallons of gasoline a barrel of oil yields and calculate the crude oil component of gasoline prices yourself? Since you think its all BS.

    Let us know what you come up with.

  19. Starfury says:

    Here is Sunny California we have ‘special’ gas so pay more. And our tax rate is almost 9% plus the federal taxes.

    My parents are in Hawaii (itty bitty islands in the Pacific) and they’re paying $4.35. Here: Cheap gas is $4.45 and as high as $4.75 at Shell/Exxon/Chevron

  20. Wormfather says:

    @Bladefist: “You do realize the oil companies margin is quite low, and has remained the same or nearly the same for quite sometime now?”

    To further that point, this is america, we’re capitalists. The whole tax the heck out of the oil companies is flawed on so many levels.

    1. Everyone aggrees that “easy” oil is drying up. This means that worst case senario, the oil companies are going to have to close up shop in 40 years. Best case, they are going to have to spend more money to get oil and do reserch on alternatives.

    2. That money we were talking about, well the best way to make sure they have some when they need it is to give it back to the investors and let them reinvest back into the company raising the companies value and captital.

    3. You cant tax an industry’s profits unless you’re going to subsidize them when the going gets bad, so if you do go this roout you may want to go ahead and look at point 1 again.

    4. Dont think for a heartbeat that if the US market became unfavorable that the major companies wouldnt take there buisness to china and india. Exclusivly.

    5. If you dont aggree with anything I just said, you should realize that for the millionth time, the blame for current oil prices is directly tied to the fed’s missctions of the last 8 years.

  21. Bladefist says:

    @Wormfather:
    To further your points:

    1) Most of you are the investors. You’re attacking your own 401ks

    2) Big Oil takes hits and has also had record losses

    3) You cant tax your way out of problems. You cant force me to stop buying gas by making it not affordable.

    4) Wormfather: They hate capitalism, which is what they want to change. Thats the hope/change. Capitalism didn’t work for them, so they’re vengeful. Capitalism doesn’t allow you to saunter through life like a rainbow.

  22. Wormfather says:

    @Starfury: No worries, here in CT we pay the second highest taxes for gas in the union and we have a “special” formula as well.

    If the federal govenment is going to do anything they need to finally overhaul the us having 50 formulas and have a national standard issued. What makes me fustrated is that this can be a executive directive (yes, congress would be better, but an exective order could make this happen sooner, in order to make it permenant, congress woudl have to “take” the right away from the states) and we could be paying $0.50 less.

  23. riverstyxxx says:

    NEWS: Many public transportation systems are running free buses/trains for the next week. OCTA here is doing it called “Dump the Pump” and passes are free from the 16-20.

    Here’s the link: [www.octa.net]
    Coupon: [www.octa.net]

    Slickdeals reports only the 19th is free, but OCTA here is free for four days.

  24. Wormfather says:

    @Bladefist: Hear hear!

    BTW, I just want to complement all of us for having a civilized discussion and not a flamefest like we usually do. It reminds me of the good old days of Consumerist before “Flame the OP” and all that other ugliness became the standard.

    /cheers

  25. ARP says:

    One thing, I did notice is that taxes seem to be a minimal component of gas prices and have been declining over time. So all this talk of tax holidays, taxes being the primary problem, etc. is a bunch of grandstanding that will have little effect on the actual costs.

    You may disagree with gas taxes, but they don’t have much impact on the costs of gas.

    @Wormfather: I agree with much of what you say, but it isn’t pertinent to our discussion regarding the source of the costs of gas. Also shooting someone (even if non-fatal) doesn’t help with the whole civility thing.

    @Bladefist: We’ve discussed this before:
    Speculation (some simply market, some caused by geopolitical uncertainity)
    Weak dollar (casued by the Bush’s Fed dropping interest rates in response to every problem),
    China and Indian economies,
    War in Iraq (Caused by Bush)removes oil from global supply.
    Sabre rattling against Chavez and Iran (being done by Bush) contributes to speculation.

  26. Wormfather says:

    @ARP: Its all connected. The number one reason, without a doubt that we’re paying more money for gas is because the dollar is weak, I mean need viagra weak, someone get give the diabetic some apple juice weak, milie vanili weak.

    And that is because Darth Bernanke and Sith Lord Greenspan were not taken care of earlier.

  27. Wormfather says:

    @ARP: Oh and please, Bush’s fed, there’s a lot of things to blame him for but he had no choice but to pick Bernanke, Greenspan hand picked him and if you go against the fed your ass is grass especially because the Bernanke/Greenspan (who goes back way before Bush) tandem always have had a sypathetic ear to WS execs who wanted nothing more than to save their ass for another week or two. There have been so many chances to clean up wall street but letting them sit in their own filth but no neither of them have had the balls to do it.

    I blame the parents.

  28. bonzombiekitty says:

    @jscott73: There’s two ranges on the Y axis there. The left side is the percentage of the price, which applies to the Oil, taxes, refining, and marketing lines. The right side is straight-up cost, which applies to the Price/Gallon line.

  29. henwy says:

    I really wish more people could be exposed to information like this and actually comprehend it. Maybe we would get less ignorance like what Skokieguy is spouting. The margin on gas has always been small and the reason the oil companies are making large profits has nothing to do with them ‘gouging’ you on gasoline. It’s all about the price of crude oil.

  30. colinrichardson says:

    i just remade the graph, stacking the actual cost of each segment (figured from total prices and percentages) to come up with something that is more legible. my chart is quick and ugly, but i think it’s much more useful than the one above (dual variable axes are useful when showing a correlation between two factors which are measured differently, but this is not the case with a total price and then percentage breakdowns).

    [www-personal.umich.edu]

    ps, what’s the code for posting links on this board?

  31. @SportsCentre: @Bladefist: Agreed. I find it hard to believe that oil companies have all of a sudden got so greedy. I had this arguement with my Father the other day. I asked him to think how much money goes back into the company itself in the way of stations and workers. True, profits may be up, but that is only b/c demand is up. If a gas company made .04 cents a gallon profit, if they sold more, they would make more. But in selling more, a whole lot of other costs get factored in. His main complaint to me was that the stations around his house charge different prices. They’re all owned by the same guy apparently. So I asked him how is it BP’s fault if some guy charges more and people buy it. It’s his stations.

  32. Bruce Bayliss says:

    Currently around $9 a gallon in central Europe.
    The breakdown’s here:
    [youmustbefromaway.blogspot.com]

  33. EBounding says:

    I see that “The Speculators” are the new villain in the gas/oil price saga. But what they do is actually rational and helpful towards society.

    The speculators are betting on oil going up, so they’re buying up the commodity. Doesn’t this make sense? If you saw gas below $4, I’ll bet dollar-to-donuts you’d tear right into that station and fill up the tank, you nasty speculator. That’s because you believe that the price is going to go up. You’re buying NOW so you’ll have more LATER but at a lower price than it would be in the future.

    Price controls the supply of everything. These speculators are buying up futures contracts because they’re confident that supply is only going to shrink in the future. It’s not irrational. The US certainly isn’t going to expand it’s oil supply. And demand across the world keeps increasing.

    But what if they’re wrong? What if supply goes up and the price falls in the future? Well then the evil greedy speculator is going to get soaked when the price bubble pops. These speculators are either ensuring there is enough of the commodity in the future, or absorbing the risks if their bet is wrong.

    The only “villain” here is government intervention preventing expansion of supply. The price is reaching a point where it may be profitable to explore more and expand refining capacity. But it won’t be permitted. None of the US candidates for president have any interest in this. Congress doesn’t have much interest either.

  34. howie_in_az says:

    I believe that Joe Random in his Lincoln Navigator daily driver that gets 9 mpg (or lower) in the city is also to blame, as are the CAFE ‘standards’ that let auto manufacturers get away with not producing more efficient engines for years.

  35. @EBounding: Is that in essence the whole end of the movie “Trading Places”? I still can’t/don’t understand what happened at the end.

  36. Orv says:

    @Bladefist: I don’t hate capitalism, but it does stick in my craw that an industry that makes record profits has been getting special favors from the government, in the form of subsidies, tax breaks, and private policy meetings with the Vice President. Capitalism means more than private profits — it means there has to be a level playing field where the risk is also taken privately. Both the oil companies and the banking industry are very adept at manipulating our corrupt government so they can have it both ways — privatized profits and socialized risk.

  37. DrJimmy says:

    These are handy averages, though the tax hit is different from state to state. There’s a set amount for the Federal tax, and then states set their own tax.

    All the tax revenue is supposed to support road maintenance & construction, so I don’t really begrudge the 37.5 cents per gallon fuel tax here in Texas.

  38. Orv says:

    @EBounding: <sarcasm> Yes, because speculators were so helpful to the internet dot.com sector and the housing sector. Surely we want some of that in the energy sector. Who wouldn’t? </sarcasm>

  39. @howie_in_az: Why would auto companies NOT want to make better engines? Most of the tree huggers have $$, so making a car that appeals to them and their smugness would bring in lots of money. I think the problem is even tree huggers don’t “want” a car that gets great mileage b/c it doesn’t fit their mental image of what a car is. I doubt we’ll ever see a bunch of Gee Whizzes pulling up to the Oscars. It’s not that cars get lousy mileage, it’s that we use them more than we ever did. Back in the day, if a store was a mile away, you walked. Now, you drive. People don’t do circular trips, they do star trips(go to one place, then home, then out again, etc..), which use more gas. I find MY shopping habits depend on what I’m doing. I will not buy something if it means I have to make a special trip as opposed to a side trip going somewhere else. Also, people don’t use mass transit as much as they use to b/c it’s seen as something lower class people do. I always have a little more respect when I see a “star” on Gawker taking the subway or walking in NYC as opposed to their West coast counterparts who drive more.

  40. Orv says:

    @Git Em SteveDave wants to come with Lindsay…to see Eddie: Actually, auto companies have been making better engines. But the improvements have been targeted at generating more horsepower to move big SUVs around or to get faster acceleration, not at fuel economy. (An average family car now sports a faster 0-60 time than most sports cars did 20 years ago.) Now that’s changing because people are starting to demand economy instead of speed and size.

  41. Wormfather says:

    @Orv: Lets say I sold crackers. Everyone loves crackers they are so good, hell, Mrs. Hummer eats a case of em a day. But oh noberries, the stuff (we’ll call if flour) I use to make crackers is running out. Well the cheapest (relativly) and most profitable thing I can do is find more of that flour and keep the party going ala jesus and wine.

    But the federal government wants to look like they’re into the issues so they want me to instead of finding more flour, spend my money to reserch using corn for my crackers. Well, if the govenment is going to ask me to do that they are sure as hell going to give me a tax break to curtail my losses as I have got some serious bosses who break fingers if profits are evar lower than the previous fiscal year’s.

    The end.

  42. Trai_Dep says:

    Curious about the 73% Crude Oil number, so could someone inform me?
    Does Big Oil take a cut from that, or is that solely going into the coffers of OPEC? Does Big Oil own any oil? If they get a cut, for what and for how much?
    That is, what’s their business model regards everything from finding new reserves thru packing it in barrels (the latter meant figuratively, of course)?
    Thanks!

  43. @Orv: Don’t forget most SUV’s are built on car frames, and are mostly just a re-designed body, which is higher and boxier than it’s car sibling.

  44. @Trai_Dep: that 73% is the portion of the cost per gallon that it takes to purchase the oil from whomever they’ve purchased their contracts from. So that is the “raw” material. To refine that crude into gas, costs about 10% of the price per gallon.

  45. ltlbbynthn says:

    Today on the radio, Thom Hartmann said if we (the US) bought gas with Euros instead of dollars, gasoline would be around $2.12 a gallon.

    Randi Rhodes said that 60% of the price of gas is speculation. Like I’d trust the freaking DOE to come out with accurate numbers.

  46. @ltlbbynthn what you mean is gas would be 2.12EU, not dollars.

  47. Orv says:

    @Wormfather: You left out the part where you get a sweetheart deal to obtain flour from government land without paying much of anything in royalties, while irreplaceably depleting the soil. Or something. The analogy gets a bit strained at this point, because it’s really not a very good analogy.

  48. anniefannie says:

    I don’t know where everyone lives but in Texas everything is all spread out. If you don’t live in a big city you can’t walk to anything. We have terrible public transportation. About the only thing within walking distance of my neighborhood is a gas station.

  49. Applekid ┬──┬ ノ( ゜-゜ノ) says:

    @Git Em SteveDave wants to come with Lindsay…to see Eddie:
    The Wikipedia article explains it rather well…. which I find amusing because it takes an Eddie Murphy film way too cerebral than it’s due.

  50. nedzeppelin says:

    @Orv: “record profits” is a short-sighted, relative term.

    all that matters is the profit margin. the percent profit. in that case, the oil industry is actually kind of pathetic, and we should be windfall taxing the hell out of tech startups and google.

    the oil industry also has record expenses but you don’t seem to care..

  51. dorkins says:

    @Wormfather: “keep the party going ala jesus and wine”

    Wow, nice gratuitous insult to Christians there. Bet you’re all kinds of tolerant, too.

  52. Orv says:

    @nedzeppelin: I’m not arguing for a windfall tax, just arguing that we shouldn’t be subsidizing an industry that’s fabulously profitable. I feel the same way about spending tax dollars on building major league sports stadiums.

  53. ShawnStruck says:

    Wow!

    73% goes to the price of crude oil. Another 16% is eaten up by refining, distribution and service stations, and the last 12% is taken away by taxes. That is a total of 100%. So they’d have you believe that oil is a zero-profit business.

    And yet somehow, in 2007, Exxon/Mobil earned $1,300 a second. $1,300. So now that means even though 100% of gasoline prices are canceled out by costs, these companies are somehow able to wring mind-bending revenue out of their not-for-profit venture. I think thatt’s pretty impressive.

  54. Mykro says:

    Who really looks for gas advertisements?
    Do they really need marketing?

  55. nedzeppelin says:

    @ShawnStruck: what are you talking about?

    the 10% clearly says “refining costs and profits”

    look in the mirror bud. $1300 a second.. that means you were busy buying $13,000 of gas a second.

  56. RayDelMundo says:

    @Bruce Bayliss:
    Here’s why:
    “With oil at its current price of $120 a barrel, tax makes up a good 60% of the pump price of €1.50 litre.”

  57. nedzeppelin says:

    @Orv: then we shouldn’t tax it to death either.
    i kind of never really understood the whole, subsidies and taxing thing anyway.

    as a legitimate question, what kind of subsidies does the oil industry get

  58. battra92 says:

    @Bladefist: @Wormfather:

    I’ve got a great idea. Why don’t the three of us go apply to be the next heads of the Federal reserve. I’d have to get that MBA first (the then PHD …)

  59. battra92 says:

    @Mykro: To differentiate between brands I guess. The only ones I remember is Shell claiming their gas is better on engines.

    99.9% of people buy on price.

    Note that the number was just pulled out of my ass but it’s probably pretty accurate.

  60. drjayphd says:

    @battra92: Don’t forget Valero’s marketing, which, last I checked… has almost nothing to do with the gas, and rather community involvement. Greenwashing much?

  61. Bladefist says:

    @battra92: At this point you could find a monkey that could do better.

  62. Fatty Shcock says:

    Alright, this is a little off topic with this post, but does anybody think we have hit “peak oil”?

    I decided to do some research, and I keep seeing cultist sites claiming that we have hit peak, and that we will run out of oil, and become doomed if we don’t take immediate action.

    But then I find sites and news articles stating that it’s just a myth, and that we have plenty of oil, it’s just not as easy to get to. Also, that the Earth “creates” oil, due to the Earth’s crusts and whatnot.

    What the hell is the truth?

  63. What goes into gas?

    99% corporate money-hoarding and bullshit
    1% gasoline

    Mix, raise the price, and serve at $4.50/gallon. Repeat.

  64. TwoScoopsRice says:

    @Starfury: Gas prices on Oahu took a jump over the weekend. I think I got some of the last $4.35/gal premium to be had. The numbers I saw on the drive to work this morning burned my retinas so unfortunately I can’t recall them clearly enough to share.

    As for taxes, last time I checked anyone who bought gas in Honolulu County paid more than 52 cents a gallon in federal + state + county taxes. One of the stations we go to used to have stickers spelling out the breakdown of taxes per gallon, I guess to redirect customer fury. That was during the era when the state legislature wanted to add a 50 (?)-cent-per-gallon surcharge for universal auto insurance. *gag*

  65. mthrndr says:

    Uh, where does ethanol fit in? Gas here is 10-15% ethanol, which is not listed in any of those percentages.

  66. @Applekid: Much like scoring in Tennis, I once understood this for about 14 minutes, and no amount of re-explaining can ever make me understand it again.

  67. battra92 says:

    @mthrndr: Uh, where does ethanol fit in? Gas here is 10-15% ethanol, which is not listed in any of those percentages.

    Good point. It certainly increases the price. :/

  68. Valhawk says:

    @SkokieGuy:
    @silencedotcom:

    The Oil Companies have had record profits based on volume not margins. The reason they make so much money is not because they make a lot of money per gallon, but because people buy so much of it.

    If your gonna go all tinfoil hatty on this then at least get your facts straight.

  69. Trai_Dep says:

    @Git Em SteveDave wants to come with Lindsay…to see Eddie: Okay, thanks. But of that 73% of the cost of a gallon of gas that crude consists of, who gets that money? OPEC, et al? The Oil Companies? Both?
    If, say, Big Oil owned/leased their wells, then for the rest of them took several bites of the apple as they found, drilled, extracted, packaged and transported it, then that would be an interesting total number to discuss.

    I wonder if this factoid disguises something like this happening: that Big Oil takes several chunks out thus making the comparison a deceitful one. That, once these hidden figures are totaled, it’s far more than how they’re presented here.

    Anyone familiar with the industry able to provide these figures?

  70. Anjow says:

    In the UK over 50% of the gas price is tax.

  71. Trai_Dep says:

    @Anjow: Well, then again, you don’t launch wars then charge it on tomorrow’s credit card. Which country loves their kids more? :)

  72. battra92 says:

    @Valhawk: Thank you.

    It’s so evident that in this country (and perhaps in all the world) there is an ignorance of just how the oil industry works which is prevalent in all classes in America.

    I’m also getting fed up with people who think any profit is “obscene.” There is no such thing as an obscene profit.

    An obscene prophet on the other hand … ;)

  73. Wormfather says:

    @dorkins: I’m sorry, I didnt mean to offend. Although my stament is blasphemous, I dont really see how that is a direct insult to christians. I also dont see how my statment indicates my level of tollerence, one way or another. To set the record straigh, I’m a non-practicing catholic, I belive in jesus and in evolution. I state that to show that I give credence to both the religious arguments and scientific ones that people debate. So I dont really see how that shows me as intollerent.

    Oh, I dont tollerate bad wine, thats for damn sure!

  74. chuckv says:

    @Bladefist: When people speculate on commodities, they buy when the price is low and sell when the price is high. They don’t increase the overall amount you pay for gas, they instead cause the price to go up when it is low, and down when it is high. In fact, because they hold contracts guaranteeing the delivery of oil on a specific date, they force producers to hold some oil off the market when there is an abundance of oil. When there is less oil on the market, they bring their oil which has been stored to market, causing the price to go down and preventing shortages. Instead of lambasting them for being greedy and causing you to pay more at the pump, you should thank them for stabilizing the price of gasoline.

  75. Siegeman says:

    Wow, you guys have really got an interesting discussion going on here. As a few of you noted, a large problem is that cheaply obtainable “light sweet” crude oil is running short. The result is that development in more complex areas is being ramped up, at incredible cost. Thing is, in most places (I believe it’s greater than 75% of the total oil in the world) is inaccessible to outside oil companies. That also means that those groups that control the remaining oil reserves are very secretive about production and reserve amounts, (Think OPEC, Gasprom) which drives up speculation and prices.

    Realistically, no matter what we do, we need oil. If it’s not for our cars and power plants, it’s for our water bottles and pharmaceuticals. (the prices of which have also been skyrocketing as chemical companies increased prices) With North American oil resources being tapped out, or located in politically-sensitive areas (such as Alaska) the only alternatives we have are Oil Shales and Sands. Between the US and Canada these amount to around 2.5 Trillion barrels of oil, and that’s just an estimate based of pulling numbers off wikipedia.

    I doubt there’s anything we can do to get oil prices to what they were 10 or 20 years ago, but what we can and should be doing is pursuing alternative oil supplies while reducing our consumption.

  76. chuckv says:

    @Mykro: If they keep doing it, it must work

  77. chuckv says:

    @Siegeman: 100 years ago, we were running out of oil before Mr. Rockefeller proved everyone wrong by finding new ways to refine and produce oil. How was he able to do this? The lack of government regulation allowed Mr. Rockefeller to do what he wished with his property and transact with whoever he wished without interference. That’s called the free market, and it allowed for one of the greatest revolutions (oil) in the history of man. It’s not that we no longer have geniuses, it’s that we’ve stifled the market through government regulations, taxation, and subsidies. When the government dictates what will be done, resources will be transferred from uses which society finds more productive to uses which a man in Washington finds more productive.

  78. Vulpine says:

    Ok, I have a question for y’all.

    According to articles I have read, the price of oil per barrel is based on the Futures market, where companies set [b[the maximum[/b] they are willing to pay on a given cycle, irrespective of the actual price at the time. Based on this, the [i]buyers[/i] of crude oil have been setting the price, not the sellers.

    Now we read of Saudi Arabia going out of its way to export more oil than OPEC wants to allow because they’re afraid the high price is going to literally “price themselves out of the market” by forcing people to move to alternate fuels. Unfortunately, based on analyses of these reports, this will have little to almost no impact on the price of gas at the pump.

    What gives?

  79. Vulpine says:

    @Siegeman:

    To some extent you are correct in that the cost of everything is going up because of the cost of oil; but your followup of North American resources ‘tapped out’ or in ‘sensitive areas’ is only partially correct. In all actuality, we have at least three and perhaps many more oil fields lying untouched in and around the continental US, one of the largest in the North/South Dakota area and another even larger one in the Gulf of Mexico off of the Texas coast. This discounts the Alaskan field (which I personally believe can be tapped without major environmental issues if done responsibly) and another one in northern Canada which is currently untapped as well.

    The point is, we don’t [b]have[/b] to rely on foreign oil and by so doing we have driven the costs up to the point that tapping what we have has become prohibitive. American Oil Company was splintered way back in the early 1900’s because of monopolistic behavior; I personally believe now that our oil companies are working together to re-attain that power to benefit only themselves.

  80. BankOfFees says:

    The oil price math is laughable. Oil price is tied to the value of the dollar. The dollar was worth a lot more 18 months ago when oil was $50/b. To look at oil as simply “it’s $140/b now vs $50/b 18 months ago” is comedic. Oil prices will fall when the dollar becomes stronger – it’s as simple as that. DISCLOSURE: I own no oil stock or futures. I do own a PhD in economics and statistics.

  81. colinrichardson says:

    tried to post this yesterday, but it looks like it didn’t show up..

    [www-personal.umich.edu]

    using the same original data as chart above, this is a stacked chart, showing price changes of each component (by applying percentages given to total dollar proce at any individual point). although this isn’t the prettiest, i think it’s more informative than the chart above (which, i think, would make edward tufte ill).

  82. Completely misleading; those numbers may be a good breakdown…of the percentage of the value that isn’t speculator-driven. Which most of it is. NYT’s estimate is that, without speculation by investors, the current price wouldn’t be much over $80 a barrel.

    A congressperson recently suggested a law to stop this practice, which I thought was *awesome* — If you want to buy oil on the market, fine. You just have to take physical possession of it.

    That would have been AWESOME. “Sir, your 500 barrels of crude just arrived…will you be selling that now?”

  83. Wormfather says:

    @BankOfFees: I have a BS in economics and I wholeheartedly aggree with your statement. It’s what I’ve been yelling out of my bullhorn. People keep pointing the finger at oil companies and I keep saying, this is Bernanke and Greenspan’s fault and that this is all tied to the policies used to help the big firms recover from the sub-prime bubble and it’s precedent the teck bubble.

    Back in the 80s when big firms messed up, they ate it like real american capitalism dictates, this, this is something else and I’m not a fan.

  84. battra92 says:

    @Wormfather: @BankOfFees:

    BS in Business Administration, Info Systems and Econ also agrees.

  85. Channing says:

    @Starfury:
    Hawaii here. Gas is tres expensive.

  86. rockasocky says:

    @Channing: Yeah but LA is usually 10c or more higher.

  87. Channing says:

    @rockasocky:
    Psh, whatever. Everything in LA costs more because you’re going to fall into the ocean so you can chill with us.

  88. austinchu says:

    Interesting. The tax on diesel is way more than regular petrol. I converted my car to run off waste vegetable oil. It’s great, I haven’t paid for fuel since January. Love it. It’s great for the environment and great for my wallet. checkout my ride on austinchu.wordpress.com