Friday, December 25, 2009

How much does it cost for an oil company to produce a gallon of gas?

I realize the different costs that must occur such as getting it, moving it and refining it but what does it cost to produce a gallon of gas and how many gallons do you get out of a barrel?How much does it cost for an oil company to produce a gallon of gas?
one barrel of crude becomes 50 US gallons of assorted products, everything from naphtha and Jet A down to asphalt used for paving parking lots.





obviously, the refining process has to be changed slightly depending on the relative prices of the various products.





Based on the financial statements of refining companies that do not own oil wells, the refining profit is about 3 US cents per gallon, or $1.50 per barrel of crude.





with crude running at $105 per barrel, that is about 1.43% total margin.





If you then check the financial statements of any large and still profitable grocery chain or discount store, you'll see that refining crude is LESS profitable than selling toothpaste, meat, or dry goods.





Exxon and the other huge oil companies make their ';large'; profits by operating at huge scale and owning [for which they paid already] some of the oil production they consume.





By comparison, Microsoft and Google regularly run at profit rates [percentage of costs to keep it comparable] ranging from 33% to 50%.How much does it cost for an oil company to produce a gallon of gas?
Very expensive and when you go to the tar sands in Alberta the refinery process gets worse.

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