Another reason gas prices are so high

Seems that the refiners have deliberately been keeping supply under tight control. For anyone who has studied economics either macro or micro, you know that as supply goes down, and demand up, price goes up. Limiting the number of refineries means you can limit supply while demand reaches ever greater heights. Hence why gasoline is over $3.00 a gallon.

The article states that the price of crude accounts for roughly half the cost of a gallon of gasoline.

So in a past post I said there was $1.17 or so that accounted for refining and transportation.

Now I can get a better fix on the actual number. As of 07/29/06 a gallon of 87 octane gasoline was $3.09 down the street from me. Taxes make up $0.48 of that so we’re left with $2.61. If half that is crude price, we’re left with $1.305. Gas stations aren’t making a large profit on gas but I’ll be generous and say they’re making $0.10 a gallon. That leaves $1.205.

The number we can’t get a true fix on is the refining cost because now I’ll include the transport in that cost. So lets do the breakdown by percentages:

Whole gallon: $3.09
Taxes: $0.48 = 16%
Station Profit: $0.10 = 3%
Crude Cost: $1.305 = 42%
Refining: $1.205 = 39%

Yes, it adds to 101% because of rounding. But While crude is the highest percentage, it is very closely followed by refining.

And you have to ask yourself, who owns the refineries? The answer is that the oil companies own them.

This is why we MUST invest in energy independence, except not a dime of that money should go to oil companies. They have long proven that they cannot be trusted to keep profit within reason.

But then, they’ve got greedy investors who demand huge returns and oh are they happy people right now.

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