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Oil Refining profit?

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    Oil Refining profit?

    As a math teacher I know that numbers can be made to read what ever you want, so here are my numbers.
    I googled the price of crude and refined gas for these numbers and I know the info you get depends on whose website you go to.

    Crude Oil Gas
    Nov 2015 $50 a barrel $2.20 a gal (National Avg)

    Jan 20, 2016 $28.15 $1.91 a gal (National Avg)

    43.7% drop in price 13.2% drop in price

    Demand price is not dropping as fast as Supply price?
    Someone is making more money than before and it is not the oil field workers
    But I bet when oil does go up again, gas prices will sky rocket!

    What do you think?

    #2
    I think you are right based on nothing more than fifty years of observation.

    Comment


      #3
      $28 a barrel for crude but a gallon of dello motor oil is still $15 a gallon. I'd say they are making more now

      Comment


        #4
        Remember, the raw material is not the only expense associated with the production. Other expenses, including labor and the costs of physical plants associated with refining, are more or less fixed expenses that don't float with either the price of oil or, in some cases, the amount of oil being refined. Not to say they aren't making more margin, it's just there are many more things to consider before drawing that conclusion.

        Comment


          #5
          Way more to costs of refining oil than just the feed price of the oil itself. Someone has to pay for the storage, transportation, pipelines, refinery equipment, etc. Also, remember, there is about an almost 50 cent tax per gallon of gas tacked onto that price.

          Refining profits are actually starting to suffer quite a bit with the low oil prices.

          Comment


            #6
            Originally posted by Ag 96 View Post
            Remember, the raw material is not the only expense associated with the production. Other expenses, including labor and the costs of physical plants associated with refining, are more or less fixed expenses that don't float with either the price of oil or, in some cases, the amount of oil being refined. Not to say they aren't making more margin, it's just there are many more things to consider before drawing that conclusion.
            Agreed. In addition, these refineries typically make other cuts. If they can make more money on other products, they will adjust their production mix. That also means that they will only make gasoline if it's profitability remains in line with their other products.
            Last edited by TCU_JJ; 01-22-2016, 10:50 AM.

            Comment


              #7
              Originally posted by Jven View Post
              $28 a barrel for crude but a gallon of dello motor oil is still $15 a gallon. I'd say they are making more now
              I think motor oil is one petroleum product that will not show a decrease in price. Mostly because most of the public doesn't think about it, hell half of them dont know which oil goes into their vehicle. Where gas/diesel everyone uses and looks at it every day. They cant get away with keeping gas/diesel high.

              Just my opinion on the matter.

              Comment


                #8
                Someone has to pay for that 10 buck a gallon ethanol thats federally mandated you know.

                Comment


                  #9
                  Remember fixed cost(refinery, distribution, etc) and taxes are per gallon regardless of crude price. Crude is only a x% of the cost.
                  Last edited by BrianL; 01-22-2016, 11:32 AM.

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                    #10
                    It also lags . . . . it'll take time for reserves that were produced at higher rates to make it through the system.

                    Comment


                      #11
                      Originally posted by BrianL View Post
                      Remember fixed cost(refinery, distribution, etc) and taxes are per gallon regardless of crude price.
                      What???? You mean them freaking pipefitters, operators and truck driver wont take a pay cut when the price of oil goes down.....The nerve.......

                      Comment


                        #12
                        Originally posted by Traildust View Post
                        What???? You mean them freaking pipefitters, operators and truck driver wont take a pay cut when the price of oil goes down.....The nerve.......
                        I've always been amazed at the small margin refineries and retail distributors operate at when it comes to gasoline. They seem to make about $4(?) per barrel in refined material whether crude is $15 or $150.

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                          #13
                          I remember when groceries went up too due to higher delivery costs and such, haven't seen them swing down with lower fuel costs. What is a canned coke at a convenient store now a 1.25?

                          With unemployment going up I'm waiting to see if those 50-60k dollar truck come back down to that 30k mark, then we will have to bail out auto makers again because they lost potential proffits.

                          Comment


                            #14
                            don't for get all of those lovely taxes (something like $0.42-0.47 per gallon)
                            the government actually profits much more than the people finding, refining, distributing, and selling gas

                            Comment


                              #15
                              Originally posted by txdukklr View Post
                              It also lags . . . . it'll take time for reserves that were produced at higher rates to make it through the system.
                              Always seems to lag when it's to their benefit. Oil goes up and gas jumps in seconds. Oil goes down and it has to go through the system.

                              Understand though, I want high oil pricing not low in the long run.

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