The price of gasoline will continue to increase this summer, and I dare you to find me one person in this country who is happy about it. People who live in the wilderness and don’t interact with society? Gas thieves? Gas cap lock manufacturers? Ok, maybe them.
You might think that gas station owners and big oil companies are loving these record high prices. But you would be wrong. We’ve all heard that these high gas prices are conversely affected by the sale of gasoline, because it is lowering the demand for the fuel in the market. The less people who can afford the high prices, the less that is sold.
Here is the latest breakdown of what goes into the price of gas:
73% – Crude oil
11% – Federal and state taxes
10% – Refining costs and profits
6% – Distribution and marketing
For some of you, this might be obvious, but it’s still an interesting breakdown to examine. The big number that gets your attention is the price of crude oil. In spite of today’s announcement that Saudi Arabia will be increasing oil production, prices continue to hover around the $135 – $140 mark.
But in further detail, take a look at that 6% distribution and marketing. That percentage includes the cost of what it takes to get the gas to market plus the gas station’s profits.
So as you can see your local Shell and BP aren’t really the well-endowed bandits you might think they are. With the cost of trucking and shipping the gasoline to stations rising because of high gas prices (being the fixed proportional numbers they are), the gas companies are biting a similar bullet.
My solution? Well if drilling in Alaska and off the coast of Florida are frowned upon by all those environmental conservatives (polar bears like Coca-Cola, but they don’t like oil?), why not get some drills and roughnecks up to the Moon. How much you wanna bet there is more oil floating in the middle of the moon (next to all the dinosaur bones) than in Saudi Arabia?
FiveCentNickel: What Goes Into Gas Prices, June 13, 2008