Reply #52: The price we pay at the pump [View All]

[reformedrethug]

today reflects the price of oil TODAY, not the price of oil when they bought it. The reason the price of gas is so high is they now have to pay an increased price for oil to replace the oil used to make the gas we buy today. Each 42 gallon barrel of crude produces about 19.5 gallons of gas along with the diesel and heating oil that is produced. This is another list of what comes out of each barrel of oil:

The most common products from petroleum are energy products: gasoline, heating oil, and diesel fuel. Other petroleum products are: ink, crayons, bubble gum, dishwashing liquids, deodorant, eyeglasses, records, tires, ammonia, and heart valves.

A barrel of oil yields these refined products (percent of barrel):

47% gasoline for use in automobiles
23% heating oil and diesel fuel
18% other products, which includes petrochemical feedstock—products derived from petroleum principally for the manufacturing of chemicals, synthetic rubber and plastics
10% jet fuel
4% propane
3% asphalt
(Percentages equal more than 100 because of an approximately 5% processing gain from refining.)

here is the link I used:
http://tonto.eia.doe.gov/ask/gasoline_faqs.asp

So if you use todays price ($3.79) in my town and mulitply that by 19.6 you come up with a total of 74.28. So that alone is just a little over half of the cost of 1 barrel of oil recouped from the gas produced from it. It takes approximately 3-6 months for the oil to make it from the oil fields to the pumps, now, what was the price of oil lets say 4 months ago? From what I have found it was around 95-99.00 and now it is $25+ higher so they have had to increase the price at the pump proportionaly to be able to purchase oil to replentish their supplies.

This is in part why the oil companies have been recording record profits, the price at the pump reflects current oil prices and not what they paid for the raw crude. Now, if for some reason oil prices fell dramatically and they STILL charged these prices THEN you would see astronomical profits and there would be a reason for the outcry for the profits moreso than now.