The price of gas these days
An in depth look at the price of gas and why it is where it is.
From
The Consumerist:
Why Is Gas So Freakin' Expensive?
Did you know that gas price gouging almost never occurs as prices rise? Rather, it's most often when dealers keep prices artificially high even as their costs fall.
As gas costs rise to $4 a gallon and oil companies earn around $100 billion each year, it's a good time to question what really goes into the price of gas.
The numbers on the gas station sign hide a complex set of transactions. Before gas can power your car, it must be discovered as crude oil, traverse three markets, and be refined from crude into gas.
Inside, we'll explain the three markets, walk you through the role of refineries, and show how oil companies use creative tactics to manipulate gas prices...
One brief excerpt:
Refineries
Refineries are the temples where crude oil gets Bar Mitzvah'd into gas. Shifts in the refining world over the past two decades have helped ratchet up the price of gas. In the early 80's, there were over 350 refineries, mostly owned by the oil companies. The oil companies didn't see refining as a place to generate profit, but as an integral part of a larger operation.
By 2002, there were only 153 refineries, and most of them were no longer controlled by the oil companies. Refineries are now held privately and independently, and as with any independent businesses, profit is key. It is in the refiner's interests to supply only as much gas as is absolutely needed to stay on the profitable side of the supply and demand curve.
And the point of interest is that there has not been a new refinery built in the last thirty years thanks, in no small part, to the enviros...
Posted by DaveH at March 27, 2008 9:47 AM