jrussell

Unfortunately the location of the source/refinement doesn't always coincide with the prices at the pump. Take Utah for example, they get their oil from local sources and refine it right there in Utah, but Utah also has some of the highest gas prices in the Country.

IMO it has nothing to do with supply and demand...it's all about making the right guy(s) richer.

Mopard

You got that right!

Cowhand

Wrong guys....even though they are making a nice profit, two things are driving prices at the pump right now, the price of oil and supply and demand.

Even though California refiners use primarily domestic (North Slope) and Mexican (Hondo) crude, it's a heavy, sour crude that requires alot more refining than the light sweet crude that comes from OPEC. East coast refiners are using more Gulf and OPEC crude that doesn't require as much refining, but costs more. It kinda balances out.

All refiners use gas oil as the feed stock for Hydrotreaters and Cat Crackers. Hydrotreaters produce diesel and Reformer feedstock, which is turned into gasoline. Cat Crackers turn gas oil into gasoline. Right now, most gas oil is being used to make gasoline, because gasoline outsells diesel about 30:1. As long as this continues to be the case, inventories for diesel and heating oil will remain low, and prices will remain high. As long as the refiners are still making money on gasoline, they have no reason to shift feedstocks to produce more diesel.

Another issue that will play into prices in the near future is refining capacity, plants usually shut down for major maintenance during the last quarter/first quarter.....my refinery is shutting down in April for 28 days. All the units that produce diesel and gas oil are going down......

PS, the refiners aren't making as much as they were last year and the year before....."crack spread" is the term used to indicate how much is paid for a barrel of unrefined oil vs what is made off of a barrel of finished product. Right now the crack spread is hovering around $17-18/barrel....two years ago it was closer to $30+.

I think I'll hang on to my 6.7 anyhow.......it gets about 6 MPG better than my Durango

jrussell

Good post. Thanks for the info.

Maybe Utah is an exception to the norm? I think the state was even talking about having an investigation into why the prices are so inflated there.

DiEseLjunKy

Yeah good post. All we need to see now is some actual costs to bring the stuff out of the ground, refine it, transport it to the convienence store etc and maybe then we won't be so mad at the oil companies? In truth the biggest profiteers off oil have and always has been the government. They make 100% profit off oil $.18 cents a gallon federal. States vary but average about $.20 cents a gallon themselves. They do absolutely nothing to help bring more supplies online refine it etc. All they do is stand in the way of that and collect tax money that they divert to wasteful social programs instead of maintaining our highway infrastructure as they should. I don't begrudge the oil companies a profit one bit no matter how many billions they EARN. Now an entity that confiscates and does nothing but create policy that raises the price I do hate them...

Dangerous Dave

I posted similar words in another thread. My truck is my DD and my Work Truck.

I could conceivably use a VW TDI wagon of some sort for maybe 50-60% of what I do. Even a small Toyota truck could maybe be good for 60-70%.

But every time I went out thinking I didn't need the Ram, something would happen.

And duplicating all the parts and most of the tools would cost WAY too much.

To a degree, our customers will just pay more as diesel gets higher.

As long as my average stays at 19 or better I'm happy enough.

Mopard

yep good info but we're all still being bent over every time we fill up ... their yearly profits plainly show this ... sorry but you'll never see me feeling sorry for oil companies cuz they only cleared $20000000000 instead of $40000000000 , the poor soles ... and that's after paying how many head honchos $250000000 per year and hiding as much profit as possible. One big racket no better than organized crime. It's sad when these obscene unfathomable profits are actually accepted by those paying them ... imo.
And btw, diesel is about 20 cents/gal cheaper than gas here ... I understand it's quite a bit more than gas down there.

jwb600

its a shame you had to sell your truck but I dont blame you. I know what should happen to these people who let these prices get where they have. I wont say what I fully think but the way things are going it may not be worth it to own a diesel in future years. it sounds like to me we will have to run an additive in our fuel all time so it doesnt eat up our pumps/injectors with this newer junk fuel.
everything is getting stupid on the prices. these big companies care nothing about the little guy. their CEOS just wanna be filty rich instead of wealthy. I think alot of things in america have become a joke compared to what they were

Blast Chamber

The oil companies have a profit margin between 7-10% on their products. That's a heck of a lot less than most other industries. I know the company I work for could never exist on such a slim margin.

When the barrel of oil was costing $30, the oil companies made $3.00 per barrel. At $90 they are making $9.00 per barrel. The higher price per barrel is the reason for record profits, but their profit margin hasn't changed one bit.

I'm not sure why people expect the oil companies to lower their profit margin when prices are high? Nobody was offering to make donations to them back when oil prices were at rock bottom and they were struggling to survive. What's next, we make Microsoft give back part of their record profits to the public? Sounds like Socialism to me. The stockholders who own Microsoft and the oil company stocks might not appreciate the redistribution of their wealth.

FMB

Ours is in the mid 8%. Youp.