Why cost of Fuel so High?

MolaKule

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Iowegia - USA
quote:
Why Gas Costs by Edward L. Daley With gas prices higher than ever, and economists speculating that things are only going to get worse before they get better, it's not surprising that average Americans want to know why saying "fill 'er up" at the pumps these days may result in them being forced to sell a kidney on eBay in order to pay for it. While several factors come into play, the current price of crude oil, which is now around $50 a barrel, accounts for roughly half of the total cost of gasoline to consumers. About a quarter of the price we pay can be attributed to state and federal taxes, and the remaining 25 percent is split fairly evenly between distribution and refining costs. It's important to note that the latter 25 percent also includes oil company profits, however, in March of this year the American Petroleum Institute estimated that oil companies currently net approximately 7.2 cents per gallon sold. Since the average gallon of gas goes for $2.24 at the present time, that accounts for only 3.1 percent of the total price at the pumps. Suffice it to say that those greedy, blood-sucking oil companies that liberals hate so much, aren't screwing us nearly as hard as Uncle Sam is, since he's taking over 8 times more cash out of our pockets than Exxon, every time we shove that nozzle into our gas tanks. And although taxes really open up our monetary veins when we fill up our cars, nobody is inserting a bigger catheter into them than OPEC. Indeed, the Organization of Petroleum Exporting Countries is clearly putting the wood to us and most other industrialized nations on a regular basis. First it cuts its oil output, and waits for demand to skyrocket. Then it increases production and sells as much "black gold" as possible... at a premium. Once the forces of supply and demand cause oil prices to drop below a certain, predetermined level, it then cuts its output once more, and the roller coaster ride begins anew. That entity makes obscene amounts of money by manipulating the ebb and flow of worldwide oil prices. Yet, even though OPEC has the ability to greatly influence the global market, its effects on the price of gasoline in this country wouldn't be nearly as profound, if we weren't so dependent upon foreign oil sources. Tell me, who's really to blame for that? Is it Saudi Arabia, Kuwait, Venezuela, or any other major oil producing nation? No. After all, when did the United States last build an oil refinery, or construct a nuclear power plant, for that matter... a quarter century ago? ****, we haven't stepped up domestic energy production one bit in all that time, and in fact we've shut down dozens of refineries in recent decades, yet our demand for energy keeps growing by leaps and bounds. The U.S. Geological Survey (USGS) has assessed that the United States is sitting on as much as 112 billion barrels of recoverable oil. And even if they've overestimated the true amount by, say, 30 percent, we've still got enough oil to meet our energy needs for many years to come, yet the majority of these reserves continue to go untapped. The main reason for this is federal environmental laws, which have effectively made drilling off limits in much of the country (tens of millions of land acres), as well as in most areas off shore. To put the amount of oil America may have at its disposal in perspective, let's compare our potential reserves to those of Saudi Arabia. The Saudis have approximately 262 billion barrels in their reserves, which is only about 150 percent more than the USGS suggests we have, and they are the number one exporter of oil in the world. We, on the other hand, are the top importer of oil, consuming 3 times as much as we produce every day. In addition to an inadequate energy infrastructure, state and federal regulations effecting gasoline refinement, which, once again, have been created primarily because of environmental concerns, further limit our production capacity. For instance, as I write this article our existing refineries are forced to produce upwards of 50 different types of gasoline... 50 DIFFERENT TYPES! This seriously hinders their efficiency, and restricts availability in various local markets throughout the country. Keep in mind that no one is suggesting certain reasonable measures shouldn't be taken to protect our environment from the potential ravages of industry. Clearly that's the responsible thing to do, however, we've taken the whole idea of it to preposterous levels in recent years, and the situation just keeps getting more absurd as time goes on. Think about it... whenever anyone of the conservative political persuasion even suggests doing something productive, like drilling for oil in ANWR and other domestic locations, which are not at high risk of suffering any real harm due to such undertakings, every liberal from Malibu to Manhattan acts as if he wants to poison their children. Frankly, that's just plain nuts! The trouble with this country isn't that we don't have the technology or the resources to free ourselves from the grip of foreign oil dependency. We do. Our problem is that, for the past 25 years or more, we've let a bunch of whinny, let's-all-hold-hands-and-sing-kumbyah environmentalists undermine our viability. We've allowed these tree-hugging peons to set us back economically, because we haven't had the guts to confront them and their representatives in public office, head on, and expose their political correctness for the dangerous lunacy that it is. What was once the land of independence has become a land of increasing dependency, and no turban-wearing opportunist from another country is responsible for that. It's U.S. citizens who keep voting into positions of governmental authority, overly protective mother figures, who's only solution to our energy problems is to suggest that we all drive Yugos from now on. So the next time you're at the pumps, getting agitated over the prospect of breaking another 50 dollar bill, ask yourself who's chiefly to blame for the outrageous gas prices you're paying. If your answer is greedy Haliburton executives, the taxman, or evil foreign oil merchants, you might want to avoid inhaling so many gas fumes in the future. While it's true that none of those folks are doing you any favors, the most ominous threat to your wallet is a bunch of homegrown, radical environmentalists, who would rather save some endangered species of dung beetle than the United States of America. Edward L. Daley, owner of the Daley Times-Post (http://www.times-post.com)
 
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Kitsap, WA
So is he saying that we'll continue to pay high prices until george gets that alaska oil he wants? I sort of suspected as much.
 
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Not Seattle, but close.
If this were the case; that radical environmentalists were responsible for high oil prices, why all of a sudden the big price jump? There have always been radicals on almost every issue. I think the radical environmentalists are too busy lighting SUV's on fire and vandalizing ski resorts to have much inpact on oil prices. It boils down to greed, from oil companies, governments (ours and others) and apathy.
 
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Arizona
While I certainly agree that OPEC members are the ones making monumental fortunes, the rest of the implications here are misleading. First, the PRIMARY reason we haven't devoted much to domestic production in the last quarter-century is simply the price of foreign oil, not the granolas (although I have HUGE issues with most of their lunacy). RECENT crude prices make domestic production viable, but prices for nearly ALL of the past quarter-century make domestic production a money-loser. If we want to GUARANTEE that the current fuel prices never declice, then let's start pumping oil from under our own ground. As always, we're too short-sighted these days to act for anyone other than "me, me, right now!" Also, why is it that we want to use OUR supply of what most people believe is a finite, non-renewable resource first? That just makes no sense. If the supply will eventually run out (and imagine what things will be like in the years immediately preceding that time), don't we want to make sure we have a reliable, domestic supply during those most difficult times? Particularly if the folks overseas want to sell us thiers cheaper than we can use our own. Finally, why do we ALWAYS think that taxes are just money thrown in the fire? The simple, rather inconvenient fact is that the VAST majority of people in this country get more dollars-worth of benefit than they pay. Only the super-taxpayers get less than they pay for. Why do folks seem to think that roads are built for free? While I'm asking, why do people not recognize roads as a form of mass-transportation? In fact, they are the least-centralized, most user-funded mass transit system we have. [ May 31, 2005, 08:14 PM: Message edited by: bulwnkl ]
 
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2,077
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Cordelia, CA
quote:
Originally posted by bulwnkl: Finally, why do we ALWAYS think that taxes are just money thrown in the fire? The simple, rather inconvenient fact is that the VAST majority of people in this country get more dollars-worth of benefit than they pay.
Not sure on that one. Went from no tax to super tax with college, Think I more than paid my non-tax time in the last 5 years... Maybe we need to make benefits concurrent with college education
 

JHZR2

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New Jersey
Taxes are what we pay for civilized society. Sure, a lot of it goes to what many would consider waste: food stamps, welfare, illegal immigrants... scientific research, highways, defense, government jobs. Sure, I dislike paying tax as much as anyone... Federal, state, city tax, it adds up. Especially considering that my parents, educated middle class citizens, were inelligible for any aid when I went to college, and will not get a dime as my brother enters college. And they dont make a whole lot of money, they just barely squeeked above the limits of being inelligible. But we also reap benefits, good public educations, safety, security, jobs, etc., etc. And you know what? I dont make tons of money, but I dont spend excessively, I am educated and I learn more each and every day, and at the end of the day, I realize that there are some sorry folks that do need aid. I dont appreciate the people that milk the system, whether theyre inner city folks or rural trailer trash, but I do feel bad for the people who cant get ahead and do live on the welfare, food stamps, or whatever other government handouts there are. So I dont buy it that all the taxes are terrible and ruin everyones' well being. Because somewhere there is someone who is complaining about taxes and how they have no money, while they sit on a huge pile of bad choices and credit card debt, while somewhere there is a subway janitor who makes his living off of gasoline taxes and the terrible, horrible public transit system... or there is the equivalent in each and every hated, dreaded government item that exists. Now, off that bit... There is a lot of truth that many are looking for instant gratification when it comes to fuel prices, by saying that we should drill in our wildlife refuges, etc. I am of the opinion that when Saudi Arabia and all the others dry up, fuel will be a LOT MORE than $2/gal. Personally, I think its smart that we not tap our resources now, when there is still a relatively large supply. Its just the right strategy, otherwise we'll be more screwed later on. But, I guess its not American to think about the future, thus why were stuck with the debt, the social security prolems, etc., etc. As for refineries, I agree that the rules, the issues, etc., are not helping anything, and what we need is more capacity, maybe some lighter regulation, etc., but we also need less guzzling vehicles, more low sulfur diesel and more efficient vehicles on the road (partially a function of the low sulfur diesel). The refineries issue is a tough one because though we need many more, placement is a tough call. You may not care if they are located right behind or just upwind your trailer park, but I do care if its right behind or just upwind of my trailer park. There is no easy solution, and the people who think they have it all figued out are often the most incorrect, progress-impeding bunch of all. JMH [ May 31, 2005, 09:11 PM: Message edited by: JHZR2 ]
 

JHZR2

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46,137
Location
New Jersey
quote:
Originally posted by MarkC: If this were the case; that radical environmentalists were responsible for high oil prices, why all of a sudden the big price jump? There have always been radicals on almost every issue. I think the radical environmentalists are too busy lighting SUV's on fire and vandalizing ski resorts to have much inpact on oil prices. It boils down to greed, from oil companies, governments (ours and others) and apathy.
I think it boils down to what the author himself claims is the case: OPEC cuts supply and waits for demand to skyrocket... Well, we're artificially causing demand to skyrocket since everyone decided that they need a big V8 truck or SUV. We dont want nuclear plants in our backyards. We want more power for everything, we leave our lights on, we do all sorts of stuff that contributes. I do and you do, merely from our existance! I dont want to open any of those cans of worms, but it seems clear as he states it, that our newly made and ever increasing demand is at least in one one way or another, our doing. Whether its our big trucks, our resistance to efficiency improving technologies, our slow adaptation of quality diesel and acceptance of high efficiency diesel engines, or misinformation that leads to emission rules, fuel guidelines (the bit about 50 different gasoline formulations was interesting to me), emissions equipment on small engines that does very little for tonnage of emissions, buy ruins fuel economy (think of all the ford focuses and saturns that advertise 32 MPG [Roll Eyes] ) We could pass the blame forever. JMH [ May 31, 2005, 09:45 PM: Message edited by: JHZR2 ]
 
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Location
High Springs, Florida
I believe that article to be quite accurate. Having worked with folks in the oil and gas industry in Ohio and Pennsylvania, I have seen more than the "average Joe". I have seen lots of refineries in PA get torn down. Worked on one of the last nuclear power plants built in the US. Seen a lot of people crying their eyes out because they were drilling a gas well NEAR their property. Making absurd claims of death, destruction, lower property values because of it. The enviromentalists disgust me. I hope I live long enough to see them all starving to death because of their actions.
 

JHZR2

Staff member
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46,137
Location
New Jersey
quote:
Originally posted by Pick: I believe that article to be quite accurate. Having worked with folks in the oil and gas industry in Ohio and Pennsylvania, I have seen more than the "average Joe". I have seen lots of refineries in PA get torn down. Worked on one of the last nuclear power plants built in the US. Seen a lot of people crying their eyes out because they were drilling a gas well NEAR their property. Making absurd claims of death, destruction, lower property values because of it. The enviromentalists disgust me. I hope I live long enough to see them all starving to death because of their actions.
Being a chemical engineer myself, I know how the plant design process works. In the end, a lot of it is just numbers, plain addition of probabilities. And, guess what, accidents and large catastrophies do happen. While I agree that they are way overblown by the environmentalists, and that often much larger fusses are made than should be. But you cant deny that corners are often cut, things are often hid under the carpet, and sometimes safety is not considered as it should be. You go ahead and populate your young children and grandchildren next to a rail yard full of cholrine tank cars or whatever other 'fun' substance you choose. I won't blame others for not wanting to (note: at three of the four locations that I spend 99% of my professional AND personal time, I am either within sight or within 5 minutes from a major refinery or chemical plant). It very well might be lack of education on part of those who make a big stink about living near facilities; that they dont know what theyre really talking about, and so theyre making undue fusses and impeding our progress and real well being. But we cant judge people for lack of education, right? JMH [ May 31, 2005, 10:14 PM: Message edited by: JHZR2 ]
 
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I, for one, have noticed a change in driving habits to conserve gasoline in Michigan. During a recent trip from Grand Rapids to Detroit on I-96, the average speed of most cars was about 82MPH, down from about 86MPH.
 
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Everson WA - Pacific NW USA
Putting the wood to us!! Gotta love that!! Then someone has to drag the bloody Nazi's out.....would you leave them out of this? It's a viewpoint. My viewpoint is that the taxes should be transparent. Everyone wants corporations to be transparent. Same should go for taxes...so then we can not only get the woody we can watch, too.
 
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Southeast Kentucky
Why do oil companies charge $2/gal of gas? Because we will pay it. When many Americans are buying large SUV's and pickups, that tells me they don't think gas is really too high.
 
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USA
Parts of this thread about environmentalists driving fuels costs are comical at best. Does it make everyone feel better to blame one source. There is not one source of fuel prices increase. Its a valuable commodity and we demand it hence you pay. Personally I still think $2+ in the US is bargain for what you get. I am not complaining. Many nations who far lower average incomes pay more for fuel/gallon with or without adjustment.
 
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10,905
Location
Nokesville, VA
quote:
Originally posted by Pablo: My viewpoint is that the taxes should be transparent. Everyone wants corporations to be transparent. Same should go for taxes...so then we can not only get the woody we can watch, too.
I think there should be no withholding for income tax and it should be due on November 1st.
 
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Location
Dixie
The oil, natural gas and shale that is available under the ground in N. America, and off our coasts is MUCH more expensive to develop than the stuff that literally flows out of the ground under pressure in the middle east. Witness all the idle pumpjacks dotting east Texas and Southeastern New Mexico. That oil is still there, but it's not economically worthwhile to go back and get it. If folks are willing to pay > $4.00 per gallon for fuel (can we have a show of hands on that?) we can leave the Persian Gulf altogether - at least until domestic supplies run out. However NO politicial gets re-elected by telling the electorate bad news.... The final reason why the price of crude oil will NEVER return < $35.00/barrel, is simple supply and demand. In this case the demand is being driven by China and the Indian Subcontinent, where they are converting from bicycles and mopeds to cars and trucks. I do agree about the Nuke plants BTW, but that's a "NIMBY" issue - even with conservatives....
 
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Location
Florida
quote:
Originally posted by TooSlick: The oil, natural gas and shale that is available under the ground in N. America, and off our coasts is MUCH more expensive to develop than the stuff that literally flows out of the ground under pressure in the middle east. Witness all the idle pumpjacks dotting east Texas and Southeastern New Mexico. That oil is still there, but it's not economically worthwhile to go back and get it. If folks are willing to pay > $4.00 per gallon for fuel (can we have a show of hands on that?) we can leave the Persian Gulf altogether - at least until domestic supplies run out. However NO politicial gets re-elected by telling the electorate bad news.... The final reason why the price of crude oil will NEVER return < $35.00/barrel, is simple supply and demand. In this case the demand is being driven by China and the Indian Subcontinent, where they are converting from bicycles and mopeds to cars and trucks. I do agree about the Nuke plants BTW, but that's a "NIMBY" issue - even with conservatives....
I agree with you, TooSlick [bowdown] You got it completely right. I will add these comments: Do not confuse politics with business. To the Saudi government, directing hate at the USA is just a way to distract their populace from how the House of Saud is looting the Saudi treasury. To ARAMCO, the USA is just another client. They care little about our problems, and they will charge us the same as everyone else for their oil. As a company, ARAMCO will do everything possible to extract the maximum profit from each barrel, including dirty tactics to drive the cost up. We do not run the show around the world anymore, in politics or business. Those times are long gone. We are a large player, however, and can leverage our strenghts to our advantage, if we have the political and commercial will to do so [Patriot]
 
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Location
Canada
Oil can be made from coal for around $32 per barrel I am told. How long before this happens and we begin to utilize our abundant coal reserves to thumb our noses at the middle east? I would have no problem paying current prices if I knew it wasnt funding terrorists directly and indirectly in the mid east.
 
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Location
Washington State, US
I think Tooslick is dead-on about China. They are consuming a lot of raw materials and at least one reason that oil, steel, concrete and etc. prices are up is Chinese demand. I understand that synthetic crude is being made in South Africa from coal right now, but it's not clear to me what the current price per bbl in today's dollars is. But we would have some ability to stabilize prices and would have a secure supply if we set up some of these plants in the US. Although coal mining is dirty dangerous business, and I don't know any way around that! It's also true that the 50+ "botique" blends of gasoline, foisted on the oil companies by Big Brother, are not helping. And the whole "gasohol" thing, which has never really worked out - for one thing you get about 10% worse mileage on 10% ethanol gasohol, for another producing corn for making the "hooch" requires diesel for tractors, etc. Plus the crap ruins fuel pumps, rubber fuel lines, ad nauseum. The constant efforts of BB to "do something" about "clean air" are now mostly counterproductive, any modern car with a working catalyst puts out only a trivial amount of the regulated pollutants (HC, CO, NOx)
 
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