Gasoline prices

[Scrub Puller]

As I see it the US oil market has been divided into two different segments.

There is the North Sea Brent price that applies to crude that is imported by tanker ships and the West Texas Intermediate price that applies to landlocked oil backed up in the Midwest by inadequate pipe line capacity. At the moment Brent is at about 124 bucks and WTI has been depressed to about 107 by Canadian oil sands production and domestic production from ND.

Most of the US population lives within a few hundred miles of the coast so the cost of their gasoline is determined by the Brent price. As I have said before folks in mid-continent get a bit of a break but the refineries (naturally) pocket most of the difference between Brent and WTI.

Those Mid-west refineries are running flat out to take advantage of the higher prices on the coast as it is easier and cheaper to transport “products” than it is to transport crude. Consequently this raises prices a little higher in the Mid-west than they otherwise would be and is depressing prices on the coast to the extent that the coastal refineries are losing money. That is to say:-- the cheaper feedstock for the Mid-western refineries gives them far more price advantage than any penalties for freight.

Because of this and falling US demand Northeast refineries are shutting down or at least exporting finished product to take advantage of higher prices overseas . . . this accounts for a lot of the media crap about the US becoming a “net exporter” of oil.

US gasoline prices are determined by North Sea Brent prices plus profits. The oil price touted by the media is the price of discounted landlocked WTI out of Cushing and has bugger all to do with what folks in the US pay for gasoline.

The big problem as I see it is that once that Keystone pipe is flowing all that Mid-west oil will assume parity with Brent and the average prices for fuel across the US will see very little change . . . apart from the fact that folks in the Mid-west will probably pay a little more.

Cheers.

[John C.]

Kind of missed out on where all that Alaska North Slope Crude is going. I very seriously doubt we are getting any north sea oil on the west coast.

We have three very large refineries in Washington that get most if not our crude from there.

The other issue you are missing is the amount of taxes being levied at the pump. Here in Washington we have just about the highest tax on gas. As I recall we are paying somewhere around $0.23 per gallon just to the state for the privilege of pumping gas in our tanks.

To summarize all this. You can get crude oil almost anywhere and even control refining costs, but you are never going to control gas prices. If the price of crude is steady, then the government is going to raise the price artificially.

[Scrub Puller]

Yair...Its not where it comes from John C. It's where it ends up...the way things are shaping the US could be getting gasoline that has been made in India ... sorta defies logic a bit.

The problem for folks in the US is the fact that administrations over the years have failed to adequately tax gasoline or (untill recently) mandate efficient engines.

Through no fault of their own folks have come to expect affordable gasoline and are bein gradualy backed into a corner. Crude oil is far too valuable to use it in the ways that we do...even over here in Ozz. with dieso at five sixty a US gallon I know folks who have just bought a Ram as a daily driver and I suppose they'll run it untill they can't.

Cheers.

[orville]

Kind of missed out on where all that Alaska North Slope Crude is going. I very seriously doubt we are getting any north sea oil on the west coast.

We have three very large refineries in Washington that get most if not our crude from there.

The other issue you are missing is the amount of taxes being levied at the pump. Here in Washington we have just about the highest tax on gas. As I recall we are paying somewhere around $0.23 per gallon just to the state for the privilege of pumping gas in our tanks.

To summarize all this. You can get crude oil almost anywhere and even control refining costs, but you are never going to control gas prices. If the price of crude is steady, then the government is going to raise the price artificially.

That $0.23 that you pay for the privilege of pumping gas into your tank just might go for road construction and road maintenance and a few bridges here and there, just like your licence plates and drivers licence fees. And any other tax involving vehicles. Minnesota and Wisconsin have a higher tax than that. Then there is the federal tax on gas also which is supposed to go for highways and bridges. I think that is around $0.45. I don't like taxes anymore than the next person but I feel the tax on gas has not kept up with the cost of building and repair of roads and highways. No matter how much they Tax, in their eyes it is never enough, they will spend every bit of it and still cry poverty.

[Greg]

I don't like taxes either but resent the fuel tax less because it is supposed to go for someting I use. But when the Feds just take the fuel tax and toss it into the general fund who knows where it winds up. Our previous wonderful govenor "diamond" jimmy doyle here in his eight pathetic years dipped in the the DOT trust fund to the tune of two billions dollars and used it for other things just like he dipped into the doctors state medical malpractice furn to the tune of another 142 million for other things. So how can you say it has not kept up orville when it gets robbed from the fund?

[orville]

I don't like taxes either but resent the fuel tax less because it is supposed to go for someting I use. But when the Feds just take the fuel tax and toss it into the general fund who knows where it winds up. Our previous wonderful govenor "diamond" jimmy doyle here in his eight pathetic years dipped in the the DOT trust fund to the tune of two billions dollars and used it for other things just like he dipped into the doctors state medical malpractice furn to the tune of another 142 million for other things. So how can you say it has not kept up orville when it gets robbed from the fund?

Sounds like a Wisconsin personal problem. It irks me when they use money collected for one thing, for another. Every body of government does it. Look at all the money saved on snow removal this year, will it be saved for another year, I doubt it. If Wisconsin does not use the gas tax for what it is supposed to be used for maybe you can work to get it lowered. Lot's of luck on that. If the tax was not going to the state it would be going to the oil companies. Have a great day

[Greg]

What padded cell do you live in orville, or is it a whole different solar system? Get it lowered? You got to be kidding. You ought to know the drill by now from every burocrat on the planet. "we are over worked, under staffed and under funded." They leave out the thing about "we do very little and what little we do is all screwed up."

[orville]

You did not read my reply very close. (You did not see the lots of luck on that) I agree with the rest of your post 100%. With those boys, old habits are hard to break. No I do not live in a padded cell, my cell is next to yours. We are taxed pretty heavily, with not much in return. Have a better day

[stinkycat]

I dislike high Fuel prices as a kid I remember .18 to .25 a gallon for gas and around .12 for diesel. A medium amount of our oil is West Texas Crude and most wells are old $5.00 a barrel wells drilled in 1930's. But what is the cost to drill the new super deep wells 2 to 5 thousand $ per foot plus all the government bribes, transportation costs and so much of the refined product doesn't meet our government mandated rules so it is exported. Then we have the clean air additives that must be added so up goes the cost. One of the most stupid moves was on diesel fuel. That caused the demise of some of diesel engines but if you are a PHD who cares. And speaking of dangerous people look what California has done over last 50 years CARB, SCAQMD

[stock]

What padded cell do you live in orville, or is it a whole different solar system? Get it lowered? You got to be kidding. You ought to know the drill by now from every burocrat on the planet. "we are over worked, under staffed and under funded." They leave out the thing about "we do very little and what little we do is all screwed up."

it is the same the world over........................