Gas, Where Your Money is Going.

When the news reports on the price of crude per barrel they are talking about 42 gallons. An average refinery takes that 42 gallons per barrel and makes about 25 gallons of gasoline, about 10 gallons of distillates (jet and diesel fuel) and the remaining 7 gallons are split up into bunker oil, asphalt, propane, butane, natural gas and coke). One thing to keep in mind; the government (Federal and State) charge a flat tax per gallon. In Utah, the State tax is $0.25 per gallon while the Federal tax nation wide is $0.15. So like all flat taxes the more sold, the more taxes are recovered.

So you are probably wondering where the $2.75 per gallon of gasoline goes? Gasoline and distillates are the most profitable products. Most the time you actually loose money on the bunker oil and asphalt.

We have not built a new refinery in over 20 years in the USA. Our refining and distribution systems are not upgraded because of the uncertainty of return on investment due to environmental regulations and unfair competition abroad. Also, if these impediments were removed we do not have the technical employees to operate. It is cheaper and easier to build, operate and maintain complexes overseas and simply ship the finished products here. Only 4% of our college graduates are engineers while China and India have 30%. We should not be proud that we lead the world in percentage of lawyers. Lastly, we have proven oil reserves that are not put into production because of our environmental anarchy. We import over 50% of our crude from countries that do not have a democratic government.

The Breakdown of Gasoline

The Rough Split of $2.75/gallon

$2.75 total
$1.67 Price of $70 per barrel of crude per gallon
$0.25 Utah State tax, it varies from state to state though
$0.18 Federal Tax
$0.07 Cost to refine
$0.10 Cost to transport
$0.05 Cost to Distribute
$0.05 Taxes
$0.38 Profit

Education for the day.