Feeling the Pain at the Pump
A few days ago I made the mistake of taking the empty lawn mower gas tanks with me when I went to fill up my car – talk about sticker shock at the gas pump.
Without a doubt, all of us are feeling the pain of increased prices and wondering just how much longer we’re going to have to choose between driving and eating, since food prices are also rising, due in part to the increased price of distribution.
The answer might be to buy a horse and grow a garden because the price of gasoline is probably not going to decrease significantly anytime soon due to the number of factors involved in the price.
The U.S. Department of Energy breaks the cost of gasoline components (for 2005) into four parts as follows:
- Distribution and Marketing – 9%
- Refining costs and profits – 19%
- Federal and State Taxes – 19%
- Crude Oil – 53%
In 2005 the average price of crude oil was $50.23 barrel and the average retail price of gasoline was $2.27/gallon [remember the good ‘ol days when gas averaged $1.85 gallon back in 2004 – the price of crude oil averaged $36.98 a barrel that year].
Since the price of crude oil is the single biggest factor (at 53%) in the cost of a gallon of gas it’s pretty easy to determine the rises and falls at the gas pump, based on the rises and falls in the price of a barrel of crude oil.
The price of a barrel of crude oil hit a record high on July 13, 2006 closing at $76.70 on the NYME. We’re not that high yet, but definitely closing in on it.
Every once in a while we’ll receive one, or more, e-mails to pass around stating the way to hit the oil companies in their pocket books is to limit the amount of gasoline you purchase, the theory being, that lost revenues will force the oil companies to reduce prices, and there won’t be any room in your gas tank for lower priced gas, if it’s already filled with the high price stuff.
Due to worldwide snafus in oil production and distribution, a wiser choice might be to keep your tanks filled at all times.
7/14/2007 9:55 AM
ARTICLES and ANSWERS 2020 