Cool infographic at the Washington Post:

click for ginormous graph

Gr2008072601566

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Source:
Why Does Gas Cost $4 or More a Gallon?
REPORTING: Brenna Maloney | GRAPHIC: Todd Lindeman
Washington Post, July 27, 2008
http://www.washingtonpost.com/wp-dyn/content/graphic/2008/07/26/GR2008072601566.html?sid=ST2008072601558&pos=list

Category: Energy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

17 Responses to “Why Does Gas Cost $4 or More a Gallon?”

  1. wally says:

    Might not giganormous Exxon profits also feature in there?
    After all, those profits are proof that speculation is driving the price, not competition between oil companies.

  2. AGG says:

    Yes Brenna Maloney, theft, gtraft, fraud and brazen rip offs can be quite complicated. And Maloney doesn’t rhyme with baloney.

  3. Jurgen says:

    Price of oil… hmmm.. 10% + 15% + 17% + 58% = 100%..
    Apparently there is no profit in the oil business.

  4. Let’s put things into perspective. The wells that are producing oil today were explored/engineered/drilled when oil was much cheaper. Five years back gives us ~ $33 and ten years back gives us ~ $17. Obviously that will create quite the return given today’s prices. If you think that today’s wells have a dollar cost per barrel still at $10 then you are in la-la land.

    Gasoline is going up because oil producing countries are keeping their light sweet crude and developing nations have more cars every day. We are replacing that supply with heavy, sour crude that is more expensive to refine and there are fewer refineries capable of processing it. The volatility is unexplainable by rational means. It could be something fishy or it could be related to the general irrationality of the economy. But we won’t know as long as the culture of creative accounting, birth/death unemployment numbers, inflation ex-inflation and “we have enough capital to ride out the storm” press releases persist.

  5. ssm says:

    The 17% ‘refining costs and profits’ should have been split into ‘refining costs’ and ‘profits’ so that we could see for ourselves that profits in the oil business are slim and government taxes DWARF profits.

  6. Bob A says:

    ..and lest we not forget, there’s that tiny percentage that goes into the Swiss bank account of certain politicians who will remain unnamed.

  7. Troy says:

    and government taxes DWARF profits.

    dwarf refinery profits, yes, since refiners are getting it from both ends.

    In the 58% pie slice for “crude oil” there’s a big chunk of rentier profit there, maybe not from the majors — CVX’s gross margin is “only” 27%, meaning somebody else is taking the bulk of the pie before Chevron gets its hands on it.

    And since when are user fees — per gallon taxes — a bad thing? Sheez.

  8. Jay says:

    I like the USD over the next 12-24 mos.. I see pressure on commodities. I know it looks bad now, but Eur and Asia are overvalued…Any thoughts?

  9. In the Washington Post, the lack of a global oil supply graph comparable to the demand graph is interesting. FYI, said graph is flat since 2005, although next year may see a bit of an up tick. Where is the discussion regarding geologic limits?

  10. AGG says:

    “Dr. Kaufman, who is not opposed to making money, is very much on target when he says that production of oil, and the shortages we are now facing are not really production problems. They are more a problem of profits for the oil giants. The question that should be asked is not how to find more oil domestically, but how much money can the industry make as a result of its eagerness to drill in protected areas.

    He is also on target when he says that should the industry find it can make as much or more money with alternative, clean sources as it can make by drilling expensive holes 20,000 feet deep in the ocean floor, it will switch to clean energy production.

    Perhaps if we can find a way for the oil and automobile industry to get rich from such alternative sources, they could then mobilize the politicians who are eager to do favors for them.”

    James G. Abourezk

  11. okamoto says:

    Apparently, you can lead a horse to water, but you cannot make it think.

  12. DeDude says:

    The reason gas is so expensive is that Big Oil desperately wants to have the contracts for the remaining oil in this country made with their pal Dick Cheney as the government “negotiator”. They know that any other president would not just hand those oil rights over to them for a symbolic sum. So they have created a false crisis in supply to get the shepple all screaming at congress to allow more drilling right now (even though big oil already have more permits than they could use the next five years). The amasing thing is that the shepple is so uninformed that there is a 66% support for giving more drilling rights away now. I guess it is true that as long as the corporate media is solidly behind them, then the neo-con-men can fool most of the people all of the times.

  13. Zeke Putnam says:

    I just know there’s a conspiracy in here somewhere!! Anyhow, it’s not my fault. I’m just an innocent bystander that gobbles up, at least, twice as much oil as any other human being on the face of the planet. The nice thing about reality is, it, eventually, sinks in. Unfortunately, the longer to sink in, the tougher it is to cope with. Good luck!!

  14. Six Stupid says:

    Financial prognosticators, of all people, are the ones who most resist the idea that oil futures speculation is causing the exponential growth in the price of crude, but how else would you explain the -20% dump oil took after it was announced that US gasoline consumption had dropped (only) -3% YOY? Then look at the auger-in crash natural gas is taking, and tell me that’s not a pure speculative play?

    If it crawls like a snake, and stinks like a snake, and flicks it’s forked tongue, hey, I think it’s a snake.

    Insider information? Mid-1990′s we got a confidential memo congratulating —- refinery employees on continued production of total distillates at 115% of certified refinery capacity. That was back when oil was $12/bbl, thanks to Saddam’s cheapest crude production price-point on earth.

    Post-GW2, Saudi’s now firmly controlling the joystick, in the absence of Iraqi oil, and I read that refinery production has fallen to only 85% of certified capacity,
    a 25% reduction in gasoline production.

    More convincing? Public records describe how oil companies have misused low-sulfur tax incentives, that is, Congress awarded public tax monies to refiners to produce low-sulfur distillates and refine heavy sour crude, but instead of investing in sulfur removal technology, which was already advanced by the early 1990′s, the oil companies used those tax incentives to lock up light sweet crude futures, knowing that Congress would eventually mandate low-sulfur diesel, and that the trucking industry would have no choice but to pay.

    Diesel here is over $5/gallon now. Did the nation’s trucking fleet mysteriously drive 3000% more miles in the last few years? Is it true, then, those trucks you see on the freeways are ALWAYS on the road, an entire warehouse inventory of JITs, circling the nation, waiting for Johnny’s online order?

    I don’t think so!

    Hilarious if it weren’t so funny, because the refiner’s are making money hand over fist refining heavy bottoms for coke used in steel production. If they’d only spent our tax incentives on desulfurization equipment instead of sweet futures, our future would be a lot sweeter, ex-GW2.

    Then it’s entirely due to speculation, the deliberate removal of production capacity, undoubtedly two oil men in the White House.

    Imagine instead of Bush Jr, FDRs ghost had been elected in 2000, and the minimum wage soared from $5.15/hour to $71.45/hour, and FDRs ghost press secretary tried to pawn it off on US as a “reduction in the supply of untrained workers”.

    Come on! Why be six kinds of stupid?

  15. Greg0658 says:

    Come on! Why be six kinds of stupid?

    Come on! How many topics do we have to be rocket scientist’s on to keep our democracy on the straight and narrow?

  16. Tom says:

    I doubt we shall never see sub $3/gal again. The easy oil has been gotten. There is plenty more, but not as cheaply accessible. More resources will be needed per extracted barrel than is currently the case. Secondary and tertiary recoveries are ongoing and deep water technologies are being developed as we blog. All these factors have the propensity to shift the supply curve to the left, raising the price for a given quantity. BTW, Chemical Engineering grads have the highest entry level salaries, to attract the best and the brightest.