Everything you ever wanted to know about gasoline prices....

I traded energy futures and options for nearly fifteen years during which time I collected data about the field so I could trade it. So here are some basics about the biz.

The breakdown of refinery yields of various refinery distillate products…. Keep in mind that there is seasonality involved so that during the warm months there will be less heating oil refined than in cold months, which means that the mix will be changed to yield more gasoline. Anyway, here is the average breakdown.

There are 42 gallons of oil per barrel which makes about 19½ gallons of gasoline, 9 gallons of heating oil, 4 gallons of jet fuel, and 11 gallons of other products, including lubricants, kerosene, asphalt, and petrochemical feedstocks to make plastics. That adds up to more than 42 gallons because of something called "refinery gain" - the processing and chemical changes increase the volume. Also bear in mind that heat of summer will cause expansion of product as it vaporizes and cold will shrink the amount on hand. Retailer (gas station) profit is about 1 to 5 cents a gallon. So they pay the posted price, less that and less taxes (federal, state, local). Since the 42-gallon barrel of crude oil makes about 19½ gallons of gasoline, a $50 barrel of crude represents about $1.09 cents a gallon to start with. That $1.09 represents the cost of production plus producer profit. Go up from there. Numbers that I found from an old hard drive that I used some time ago had this for other increments of the cost per gallon:
refiner cost - 13c
marketing cost - 5c
transportation cost - 15c
retailer cost - 5c
refiner, marketer, transporter, retailer profit - 10c (total, not each)
So add $.48 to the $1.09 and we get to $1.57. But then there are taxes which in gasoline are actually VAT (Value Added Taxes) because states add taxes for transporting gasoline via pipelines and trucks. Then there is the federal tax on each gallon of gasoline sold of $.185 which brings the cost of gasoline at $50 per barrel of crude to $1.755 per gallon of gasoline.Then add sales tax of 7.25% which brings it up to $1.88, which is the retail price of zero tax gasoline in zero tax states like Georgia today (1/25/07). Eleven States levy additional State sales and other taxes, some of which are applied to the Federal and State excise taxes (tax of a tax). Additional local county and city taxes can have a significant impact on the price of gasoline. AND don't forget the local pollution reformulation bullshit that is added in various parts of the country. So today, with the price of crude over $55 per barrel the retail price of gasoline in Los Angeles, a high tax high reformulation area, is $2.38.

Retail price in Georgia an almost zero tax state is $1.88 per gallon. Which is exactly the calculation I did above.

Some business stuff: As a little add on exercise, try to figure out who is selling what to whom. One example out of God only Knows how Many: Unocal has been acquired by ChevronTexaco, but the Union 76 brand (however not the 76 ball logo) was acquired by Tosco in 1997; Tosco was acquired by Phillips, and Phillips merged with Conoco - so probably when you buy Union 76 gasoline, you're buying from ConocoPhillips. Maybe.

So there.......Now let's talk about the biggest line of energy BS going: ethanol. To begin with, to run all vehicles on ethanol would require 100% of all land in the United States be converted to corn...EVERY ACRE. See HERE. Next, is the horrible fuel mileage you get from it, most estimates are double gasoline. Next is the amount of energy consumed to produce the shit. You are being propagandized (what else is new??) by the corporate mega giant ADM and Carghill, both corn processors. Other negatives like the suddenly expensive feed corn to farmers to feed pigs and cows are covered in an excellent WSJ editorial today.

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