Finally, I found the refining costs per barrel of oil — $4.33 (2004 figure), so I’ve taken it and added in the 3.7% inflation to make the refining costs $4.49 per barrel. So, now let’s have an honest discussion about how much the oil companies are truly making on a gallon of gas.
A barrel of oil is $76.30, cost of refining $4.49, which makes the grand total $80.79. A barrel is refined down to 42 gallons of material. 55% of this is the gas that runs our vehicles, so the oil company gets 23 gallons of gas for each barrel of oil.
It costs the oil company a total of $1.92 a gallon. According to an article on CNN, 3% of the price of gas is the transportation costs, so that is $0.96 a gallon. Federal Taxes are $.184 per gallon. Wisconsin State Taxes are a whooping $0.309. So, let’s add that all together:
Final — before profit for the gas station and the oil company: $2.52 a gallon. But, I’m paying (and I paid this am) $3.19 per gallon. AND, the barrel price I used was from today and that gas won’t be in my tank for three months. So, I read that gas stations make between 4 and 7% per gallon, so let’s split the difference and say that the gas station is making 5.5% on a gallon of gas. Now that brings our total to: $2.65, so that means the oil company makes $0.54 on every single gallon they sell. That’s a profit of 20.36%
Now, I’m mad!
Let’s do a little more figuring. Let’s see how much the oil company made per gallon in this same week in 2005 (I don’t have my gas prices for 2004 or 2003 with me at the moment).
A Barrel of Oil Cost $55.05 this week in 2005. I’ll use the same $4.49 for refining. Total per Barrel: $59.54. The price per gallon comes to just $1.42 — exactly $0.50 less than today. The transportation costs are $0.07, Fed Taxes are still 0.184 and WI tax is 0.309 (although I this it was really 2 cents cheaper, but since I am not sure, I’m going with this year’s tax). Grand Total: $1.99, but again no profit for gas station or oil company, so add in $0.11 for the 5.5% gas station profit and the price per gallon is $2.09. The cost of a gallon of gas this week in 2005 was $2.39 (in case you’re wondering, I was bitching then, too). That’s a profit of $0.30 per gallon or 12.37%.
What does this mean?
It means that the oil companies have raised their profit margins from 12.37% to 20.36%. That would be great if we, the consumers, had any control over the situation. We don’t set the price for the barrel, nor the tax. Nor, really, the amount we consume. I have to get to work. I don’t have a choice in putting 500 miles on my car each week. I’ve looked into bus schedules, but the Racine and Milwaukee bus lines suck, so here I am, paying an outrageous price for gas.
If the oil companies profit margins had gone up a little, say to 15%, I wouldn’t think we were getting screwed, but I don’t know many companies who can merely raise prices and raise their profits so quick. Mine can’t, how about yours?
I have a question I just thought about — why is it that if I buy toilet paper in bulk, I get a discount, but no one is offering a discount if you purchase a lot of gas?