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)
@Wormfather: “keep the party going ala jesus and wine”
Wow, nice gratuitous insult to Christians there. Bet you’re all kinds of tolerant, too.
@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.
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.
Who really looks for gas advertisements?
Do they really need marketing?
@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.
@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.”
@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
@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 …)
@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.
@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?
@battra92: At this point you could find a monkey that could do better.
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?
What goes into gas?
99% corporate money-hoarding and bullshit
1% gasoline
Mix, raise the price, and serve at $4.50/gallon. Repeat.
@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*
Uh, where does ethanol fit in? Gas here is 10-15% ethanol, which is not listed in any of those percentages.
@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.
@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. :/
@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.
@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?
In the UK over 50% of the gas price is tax.
@Anjow: Well, then again, you don’t launch wars then charge it on tomorrow’s credit card. Which country loves their kids more?
@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 …
@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!
@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.
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.
@Mykro: If they keep doing it, it must work
@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.
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?
@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.
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.
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).
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?”
@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.
@Wormfather: @BankOfFees:
BS in Business Administration, Info Systems and Econ also agrees.
@Starfury:
Hawaii here. Gas is tres expensive.
@Channing: Yeah but LA is usually 10c or more higher.
@rockasocky:
Psh, whatever. Everything in LA costs more because you’re going to fall into the ocean so you can chill with us.
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