What's Driving Up the Price of Diesel?

I think the oil companies charge higher prices because we pay it.

Oil companies are making record profits right now. Record profits because costs aren't going up at the rate they are raising their prices.

What sickens me is nothing is being done by the powers that be to address it.

Spdloader

So what do they need to address and how ? It seems to be it is a supply and demand issue. China wants it and we want it and the supply is limited and will be until we get away from using oil for almost everything.

Spdloader wrote:

RECORD PROFITS

I'm not okay with the price of fuel going up just because people want it.

I'm not talking about the Chinese wanting it too, I'm talking about the price gouging that goes on with it here, once it gets to our refineries.

I'd like to see the government ask the oil companies to take a 25% cut in their profits and reduce the price of fuel, then if they don't, the government should raise the tax on their profit by 25%.

I think for the first time ever, I actually agree with SnoMan on something.

Spdloader

I'm not forgetting the tax, but it'd only be .43 cheaper without it.

I'm talking about an additional tax on the profit the "big oil" is making.

Spdloader

Next time you're at the pump watching the equivalent of the gross national product of some small countries count off as you fill the tank, read the little sticker that details the taxes "included" in the cost of the fuel.. It's not a small part of the cost by any means..

I believe the tax is fixed on a per gallon basis. Someone earlier mentioned

43cents and that sounds about right I guess. So if you take into consideration that gas prices have almost tripled in the last few years, the tax rate has stayed pretty much the same. The argument given to consumers is that the cost of producing one gallon has increased significantly due to all of the previously listed reasons(I seriously doubt that is has actually tripled). But, to give it the benefit of the doubt let's just say that it has. So we have the following breakdown of one gallon of gas:

(These numbers are an educated guess and are for discussion purposes only!)

In 2000 $1.10 pump price

-$.43 tax =$.67 per gallon gross revenue

-$.55 acquisition, refinement, and distribution costs =$0.12 per gallon of profitability or roughly 18% gross profit margin.

In 2005 $2.90 pump price

-$.43 tax =$2.47 per gallon net revenue

-$1.65 acquisition, refinement, and distribution costs =$0.82 per gallon of profitability or roughly 33% gross profit margin.

Why should people be upset with the oil and gas industry?

They went from making $.12 per gallon to $.82 per gallon! This EQUATES TO A

583% INCREASE per gallon of gasoline sold!! Just think, if their profit margin had just remained steady at 18% over the last five years, their net income from profit would have still tripled and gas prices would be at ~$2.01 per gallon right now.

Oil and gas companies are LAUGHING AT YOUALL THE WAY TO THEIR OFFSHORE BANKS! What are you going to do about it?

Razor

"The OTHER Kev>

On Mon, 10 Oct 2005 05:04:22 +0000, Razorblade rearranged some electrons to form:

The total tax burden varies by state.

Great piece of reference material...thanks!

Its been well documented that oil companies closed down some refineries and reduced capacity to drive up prices of refined products (like diesel). This happened way before Katrina hit. The refinery profit margin has increased by 100% in one year. While crude oil has increased in price, most of the recent fuel price increase is due to lack of refining capacity. What folks may want to get up and arms about is just a couple days ago the House of Reps passed a bill (by two votes) giving all kinds of breaks to oil companies to build new refineries! I don't want to start a political argument here - I just hope we all can be more aware of what is going on, and maybe write to our representatives to let them know how we feel. It really does look like oil companies have bought control of congress.

John

If refineries have closed down then why don't I see a lot of stations with signs in front of them saying they have sold out for the day try again tomorrow ? Is there anyplace in the country other than around the gulf that getting the product is a problem ? It sure isn't where I live.

Doctor John wrote:

Because there isn't a shortage.

Spdloader

A lot of people have reduced their driving because of the high price so we have avoided a shortage. Good old supply and demand in action. The high price has driven demand down or we would probably be having shortages.

080606020406060005030305 [snip]

Maybe because of this:

According to the Foundation for Taxpayer and Consumer Rights, major oil companies have exported over 90 million barrels of heating oil in the first two quarters of 2005, an amount close to 50 times the volume of the Northeast Heating Oil Reserve.

Full story at

And it is that very philosophy for the last several years that has gotten us in the pickle we are today

I feel better now that we disagree again, I thought I was getting sick.

Spdloader

080606020406060005030305

Great article...manipulating supply...reminds me of "Atlas Shrugged"

It isn't a shortage, its just a reduction in capacity. As has been said, the demand is high and supplies are tighter, so a higher price is being charged. You could just say its good old capitalism at its finest. The part that gets me worried is that it appears to be a plan by oil companies to drive up prices way beyond any natural process, and, as opposed to the good old days, they are very few oil companies to allow for proper competition. Anti-trust laws had to be enacted to keep monopolies from forming and screwing the consumer. The handful of oil companies running the show today are acting like a virtual monopoly over a precious commodity. I hate 'big government' but this may be a case where the Feds need to step in before us little guys are squeezed dry. Just my two pence....

John