Why Are Gasoline & Home Heating Fuels So Expensive?

".....Microsoft, for example, without having to invest billions of dollars in depreciable assets, has a profit margin on the order of 20%. Sell $100 of product, make 20 bucks.

Again, who's the robber baron?....."

The difference is that we Americans have a choice not to buy Microsoft products. They have plenty of competition &, unlike "Big Oil", we don't need their products for our very survival. (I can get to work without a Microsoft product.....I can keep my children from freeezing to death in their beds without Microsoft products)
Maybe corporate greed will push us hard enough that it will become a popular idea to just nationlaize the oil industry & throw the greedy bums out!

Ive been watching this thread for a while now and almost replied a couple of times. But seeing how the emotions were flying I figured I would wait for a bit before posting anything.

I am not up on current events, economics, the science of oil production or refining, nor do I really pretend to understand anything about why the prices are so high (which I think was the original point of this thread).

Having said that, I feel we tend to complain about everything in this country instead of counting our blessings and appreciating our extreme fortune to be living in this country. Even though our capitalist way doesn't always meet the needs of the little guy, we generally do OK, or better than OK.

Our lifestyles are full of gadgets, toys, and generally packed to the gills with stuff (not that I am not one of the worst offenders!) When it comes to the essentials there are very few exceptions to the statement that everyone can re-prioritize and afford to eat, stay warm and live.

So what we are talking about here I think is that we are jealous of those who appear to be doing better than we are and furthermore we don't like it one bit! That is a slippery slope in my opinion because where does it ever end, and how are we ever going to be happy?

I think the simple answer is that prices are high because they can be, and those that control the prices need to maintain there lifestyles of the rich and famous, well in my humble opinion they can keep it. I'm happy with my life and am grateful for what I have. In the final analysis maybe more of that would make this world a better and friendlier place to live.

Devil5052 wrote: The difference is that we Americans have a choice not to buy Microsoft products. They have plenty of competition &, unlike "Big Oil", we don't need their products for our very survival.

At the moment you have a choice but that may change in the future as MS products become more ingrained in our lives. Choosing a OS other the Windows really limits whats available to you, not trying to start a OS war but that is just a fact. If you want to analogize it to gasoline its like saying we have this other gas but you can't drive in 40 of the 50 states with it.

Islander wrote:Gary,

Point #1, the oil companies own the oil, so when the price goes up, they make more money. Example, if a barrel of oil costs them $20 to get out of the ground, and they sell it for $50, they make $30, sell it for $90 and they make $70. Quite obvious, right?

Of course, when the price goes down, like in the late '80s, to $10 a barrel, then the lose money. It doesn't matter what it costs them, all that matters is what their product is worth. It's been mentioned here before, the profit margin on gasoline is in the order of 8-9%. Sell $100 of gas, and they make 8-9 bucks. Microsoft, for example, without having to invest billions of dollars in depreciable assets, has a profit margin on the order of 20%. Sell $100 of product, make 20 bucks.

Again, who's the robber baron?

Point #2, I believe (may not be correct, but I think it is) that there is not necessarily a fixed amount of gas, diesel, kerosene, etc in a barrel of oil. Meaning, that they can change refining processes to get different products in different amounts from a barrel of oil. I believe the refiners can get more diesel from a barrel of oil if that's what they want, or less diesel and more gasoline, for example. During the 1st gulf war, Navy ships needed much more jp-5 than they did dfm, (diesel fuel, marine) and the refineries in Oman had to call in extra ships to take away all the extra dfm, as they couldn't store any more on site, before they could get us the jp-5 for the carriers.

Heating oil has doubled, you're just not starting at the right time. The last time I bought diesel for my boat was 2005, and the most I ever paid was $1.70, and the usual price was 1.40. Now diesel is $3.00. Diesel is heating oil, more or less. And it's doubled. Gas has actually gone up less, percentage wise, than the other fuels. When we see $4.00 gallon gas, then it's doubled.

You are right about part 2. They can get pretty much whatever they want out of a barrel of oil. The diagram showing the different temps at which different elements are distilled out is the old method. Now they crack the larger crued molecules down into whatever they want. I don't know how they do it but it is possible. I believe the way they do it now also produces bigger yields than straight distillation. That is also why diesel is no longer mearly a by product because if they don"t want to make it they will turn it into gasoline or something else.

There is in fact a fairly constant percentage limit of what products can be had from a barrel of crude. A 44 gallon barrel of crude can deliver about 20 gallons of gasoline at best. There are similar limits on the lighter and heavier distilled products.

coaledsweat wrote:There is in fact a fairly constant percentage limit of what products can be had from a barrel of crude. A 44 gallon barrel of crude can deliver about 20 gallons of gasoline at best. There are similar limits on the lighter and heavier distilled products.

Guess I should have researched before opening my mouth. There are practical limits to each product you can get out of a barrel. Here is a interesting site http://www.eia.doe.gov/kids/energyfacts/sources/n ... inery.html
From the few places I looked they get anywhere from 20% to 50 some % gasoline out of a barrel.
There are many factors that create the differnce in yield two of them where the oil came from and where it is being refined.

Sorta what I figured, not 90/10 and 10/90, but a bit variable in the 50/50 middle.

There are oil wells all over the mountain behind my house, when the price goes above $60 a barrel they pump it, below that there's no money. It takes either gasoline or electricity to run the pump and most of these wells were used up in the 20's. Some guys use the natural gas to run the power. If you are interested check out this site, these pictures look like my backyard. http://www.petroleumhistory.org

Cracking breaks longer carbon chains into shorter carbon chains via a catalyst at a temperature and pressure that I would not have believed was possible without an explosion or fire which would happen if there was a failure in the system....

I heard Sean Hannity talking about oil prices today on the radio and about how Hillary Rotten Clinton is requesting a release of oil from the strategic oil reserves to help force a drop in the price of oil.. This makes her look like a hero and a do-gooder in the eyes of the gullible masses, however she failed to take into account the real reasons for the high price of a barrel of crude, some of which include:

1) The US imports 60% of it's oil. That leaves us at the whim of the country producing that oil.

2) The environmentalist crusaders and their agendas have had sucess in persuading lawmakers to prevent construction of new refineries (no new refineries built in the US for over 30 years), as well as preventing exploration for new sources of domestic crude oil, also the tapping of large known oil fields (Anwar, off-coast, etc.), Existing domestic refineries are currently running at full capacity. The lawmakers also have their sights set on the gradual ending of COAL MINING.

It has been explained that the environmental effects of drilling in Anwar or other areas is minimal and doing so would allow the US to produce enough crude to be energy independent, resulting in a lowering of the rising cost of fuel. The actual profit in a gallon of gas to the refineries is about 8%, a large part of the price of gas is TAXES. I don't see the government lowering these taxes to help lower fuel prices! Why...because taxes are needed to fund the government.

Instead people like Hillary focus on spending our tax money on...well here's the link to what she says she would do....
**Broken Link(s) Removed**Some politicians are more concerned with their image and their legacy in the history books then the actual hard facts surrounding an issue and how to best resolve it. Some of the things an honest politician would have to do would not be the most popular idea and may cement his defeat at the next election, it's a shame most of them are more concerned with climbing the political ladder and becoming Queen Of The World.

Just my 2 cents...

The gas tax is roughly 16% the cost of a gallon of gas in OH. 8 years ago it was roughly 30% the price of a gallon of gas. So they have not risen proportionally. Gas tax is the fairest way to pay for roads. It is simple the more you wear them out the more you pay. Bigger trucks tear up the road more and they also use more gas, so they pay more to use the road. Everyone has the option to not pay gas tax quit driving and get a horse. The only other way to pay for a road is a toll road. We can privitize them like most are doing now. Private companys must make a profit so they do it by charging more.

Because They Can...........................

Cyber36 wrote:Because They Can...........................

Damn straight!! (Same reason why bank robbers rob banks)

In my opinion, in a time of war for the major oil companys to be virtualy "raping" their fellow citizens (highest profits in history for any type of business) & ruining our entire economy is not just immoral &illegal (to conspire with other to fix prices).......it really is TREASON!!
I say we nationalize the oil industry & throw all the CEO's (& families or even just acquaintances) in prison!

Thought it may be a good time to re-open this thread because prices are going to start to soar again after Tuesday's election!

Take a look at my predictions (from 1/4/2007 at 11:48am..1st page & 1/5.. 7:05pm on page 2of this thread last year) & tell me I'm paranoid & wrong again.