Here we are again! Paying high prices at the pumps. Americans can't afford to pay for gas like the Europeans. 1. The United States is too vast. 2. We don't have mass transportation, and 3. We can be controlled by OPEC screwing us all the time. In my opinion it is time to start using our political power to screw OPEC. We need to tell countries that we will no longer protect them if they buy gas from OPEC countries and we need to start drilling for oil in Alaska. I think that gas, as well as all products sold in the world should be on a cost plus REASONABLE markup of no more than 2 to 3 percent. American business is getting too big and we need to stop it or the middle class will soon become the lower class. Who will soon become the lowest class ever. If another recession ensues because of high fuel cost, I sure hope the American Government steps in to put an end to this price gouging. Has capitalism and greed failed us again. I think so.
Why are gas prices so high, are we being price gouged by our gas stations, oil companies, or OPEC.
EXECUTIVE SUMMERY
In this article I will attempt to provide evidence on the actual costs behind the price of gasoline and the reasons why I believe there are holes in the reasons for gas to be rising.
INTRODUCTION
Gas price in American especially in the Midwest have never rising over $2.00 per gallon, however at the current time the price of gas is at $2.19 per gallon for unleaded regular and $2.39 per gallon for unleaded premium. This is significant since during the oil crisis in the 1970s experts warned that the price of gas would reach two dollars a gallon, but it never did. Not until March 11, 2004 did the prices rise to over $2.00 per gallon. On that day the price of a gallon of regular gasoline rose to $2.09 per gallon in most places in Fort Wayne, IN. Are these price increases warranted? Is not the gas I buy today for $1.84 per gallon the same in content as the gas I can buy tomorrow for $2.09? The answer to the former question is no, however the answer to the latter question is yes.
WHERE IS THE GAS I BOUGHT YESTERDAY DIFFERENT FROM TODAY
Where is the gas I bought yesterday different from the gas I bought today? In fact it is not, both gas is 87 per octane. There are no extra chemicals. An "average" raw crude oil contains about 84% carbon, 14% hydrogen, 1% to 3% sulfur, and less than 1% each of nitrogen, oxygen, metals, and salts. In the refinery, most of these non-hydrocarbon substances are removed and the oil is broken down into its various components, and blended into useful products (http://midwestpub.com/pages/aa06_Refining/6_Refining_4Overview.html). Petroleum consists of three main hydrocarbon groups. Paraffins consist of straight or branched carbon rings saturated with hydrogen atoms. Naphthenes consist of carbon rings, sometimes with side chains, saturated with hydrogen atoms. Aromatics hydrocarbons are compounds that contain a ring of six carbon atoms with alternating double and single bonds and six attached hydrogen atoms. In a US refinery performs three functions: distilling, conversion and treatment. These are the only variable costs that I can see, besides transportation. If there is a variable cost, since we are buying less gas, compliments to our evil brother supply and demand, the variable cost in total would be less.
THE PRICE OF A BARREL OF GASOLINE
The following is a graph of the the price of a barrel of gasoline from 1947 till 2003.
The price of a barrel of oil today is less than in the 1970s however the price of a gallon of gasoline is currently higher than in the late 1970s. This is very strange to me and hopefully will be strange to you as well.
The following chart shows the current price of a barrel of crude oil and a gallon of gasoline in the National Exchange in New York:
The price of a barrel of crude oil decrease 30 cents a change of negative .72 percent. Yet the price of a gallon of gas went up 25 cents to $2.19 per gallon today. We are definitely getting price gouged.
A barrel of crude oil contains 42 gallons of the substance. And the price of a barrel of crude oil cost $41.20 as shown above in the Bloomberg chart. Based on this information the cost per gallon of gasoline should be $0.98 per gallon plus applicable refining fees and taxes. Found by:
On average 42 cents goes to the government, 61 cents goes to the refineries and five cents goes to the individual gas stations. Based on that knowledge the price of gasoline should be only $2.07 a gallon currently. Found by:
$0.98 per gallon + $0.42 in taxes + $0.61 variable refining cost and profit + $0.05 profit for individual stations = $2.07 per gallon1
A ten dollar increase in the price of a barrel of crude oil should only cause gas to rise 25 cents.
CONCLUSION
In conclusion, the price of a gallon of gasoline better have went up in price $10 yesterday or we are getting price gouged by our own American companies. We Americans need to keep a closer eye on the price of the energy we use. People will try and take advantage of something the is so important to our human nature in the technological area. Most OPEC countries dislike the United States and will try to use oil prices to control us. OPEC countries include: Venezuela, Algeria, Libya, Nigeria, Saudi Arabia, United Arab Emirates, Kuwait, Qatar, Iraq, Iran and Indonesia. Please watch the price of a barrel of gasoline and relate it to any increases or decreases in price to detect any sort of price gouging. Also, continue to look at this page for any additional information I can give you. New information will be typed in blue. Also, remember if the price of gasoline is affected by supply and demand, you can make the price of gas decrease by driving less, carpooling, riding bikes, walking, or driving more fuel efficient cars!
1Found online at http://seattlepi.nwsource.com/business/oil30.shtml