After reading the other thread I thought I would put this out there.
Here is an overview of gas pricing.
Oil companies base their marketing margin on the difference between the wholesale “rack” price and what they charge their “branded” customers. So if the price for Joe’s gas or anybody who has a fuel delivery truck drives up to the common carrier rack and loads they will pay today in the SF East Bay Area 2.668 Cents per gallon of regular 87. By the way the price just went up 5 cents at 1pm today. If the oil company sells that same gallon to their branded dealer above that price marketing makes a profit, if it is below they claim a loss. So that 9 cents per gallon it not necessarily true.
They also make money at the well head with the oil they produce if they are intagrated. Say there fixed cost is $24 a 42 gallon barrel, they the sell it to themselves at whatever the market rate is that day. At $70 a barrel they in theory just made $46 but it all depends on what kind of oil the produce. The “record” prices you see are for light sweet crude but most crude is sour and trades at a significant discount to the light sweet.
The third area of profit is the crack spread. This is the profit the refiner makes by refining or cracking the oil into distillate products like gas, diesel, Jet A or whatever. This is generally stated on a per barrel basis.
Now the government gets in on every level of the process taxing and regulating it all. So on that rack priced gallon of gas above of 2.668 there is already taxes built in to the price. But now the big taxes get added. Onto the invoice is added .483 in tax. This includes 18.4 fed tax, 18 California tax, other misc tax totaling .374 cents per gallon as well a part of the sales tax that is pre collected. So right now in California at 8% sales tax there is close to 24 cents sales tax per gallon. So one could argue that there is close to $1 of tax on every gallon of gas sold in California.
You also need to take into account credit card fees of 2-3%. So at $3 if ou use a credit card at the pump the big banks get 6-9 cents taken right out of the gas station owners profit and this is added to the price as well.
So an integrated oil company is right now making way more then 9 cents per gallon and that is reflected it the huge profits you see reported. But you don’t hear too much about how profitable it is for the government as in addition to the tax per gallon the will now collect tax on these giant profits as well. California just announced they "found" 12 billion dollars in additional revinue. I would bet it is mostly from additional sales tax on the higher gas price.
Hope this helps.
Dave
Here is an overview of gas pricing.
Oil companies base their marketing margin on the difference between the wholesale “rack” price and what they charge their “branded” customers. So if the price for Joe’s gas or anybody who has a fuel delivery truck drives up to the common carrier rack and loads they will pay today in the SF East Bay Area 2.668 Cents per gallon of regular 87. By the way the price just went up 5 cents at 1pm today. If the oil company sells that same gallon to their branded dealer above that price marketing makes a profit, if it is below they claim a loss. So that 9 cents per gallon it not necessarily true.
They also make money at the well head with the oil they produce if they are intagrated. Say there fixed cost is $24 a 42 gallon barrel, they the sell it to themselves at whatever the market rate is that day. At $70 a barrel they in theory just made $46 but it all depends on what kind of oil the produce. The “record” prices you see are for light sweet crude but most crude is sour and trades at a significant discount to the light sweet.
The third area of profit is the crack spread. This is the profit the refiner makes by refining or cracking the oil into distillate products like gas, diesel, Jet A or whatever. This is generally stated on a per barrel basis.
Now the government gets in on every level of the process taxing and regulating it all. So on that rack priced gallon of gas above of 2.668 there is already taxes built in to the price. But now the big taxes get added. Onto the invoice is added .483 in tax. This includes 18.4 fed tax, 18 California tax, other misc tax totaling .374 cents per gallon as well a part of the sales tax that is pre collected. So right now in California at 8% sales tax there is close to 24 cents sales tax per gallon. So one could argue that there is close to $1 of tax on every gallon of gas sold in California.
You also need to take into account credit card fees of 2-3%. So at $3 if ou use a credit card at the pump the big banks get 6-9 cents taken right out of the gas station owners profit and this is added to the price as well.
So an integrated oil company is right now making way more then 9 cents per gallon and that is reflected it the huge profits you see reported. But you don’t hear too much about how profitable it is for the government as in addition to the tax per gallon the will now collect tax on these giant profits as well. California just announced they "found" 12 billion dollars in additional revinue. I would bet it is mostly from additional sales tax on the higher gas price.
Hope this helps.
Dave