Wednesday, April 28, 2010

If Exxon pumps its own oil, refines its own oil and sells its own gas, why aren't Exxon gas stations cheaper?

I have heard recently that contrary to popular belief is that there is no oil shortages. The US is the third largest oil producer on earth behind Russia and Saudi Arabia. And finally the largest oil companies on earth that pump oil, refine it and distribute gasoline entirely in house are all US based companies. Is there price gouging? and if so, is it a coordinated effort by all these oil companies? Is there a government conspiracy? If there is some sort of gas shortage to quantify a supply and demand problem, then why haven't any refineries been opened in the past 30 years? I dont want to hear ';bush wants money'; or other stupid responses, if you have any clues or ideas please respond to this. Any facts would be welcome as well, perhaps to counter my information. ThanksIf Exxon pumps its own oil, refines its own oil and sells its own gas, why aren't Exxon gas stations cheaper?
I don't think Exxon really pumps enough of its own oil. From here: http://www.mailtribune.com/archive/2005/鈥?/a>





You can see it pumps around 2.5 million barrels per day, which would make about 50 million gallons of gas. US consumption is much higher, but I don't have the numbers on hand.





Most of the oil that the US uses is imported from various regions around the world. This chart is semi-outdated, but you can see our increasing dependence on foreign imports: http://www.aceee.org/transportation/oils鈥?/a>





Go here first: http://answers.yahoo.com/question/;_ylt=鈥?/a>





The distribution has actually changed over time: http://tonto.eia.doe.gov/oog/info/gdu/ga鈥?/a>





I think it costs more to refine now because of the extra fuel additives that are mandated by the government.





As you can see, the crude oil on the market makes up most of the price of oil, which Exxon doesn't really have control over. Crude oil prices are generally determined by the futures market, which has bid up the price based on the uncertainty of future supply. In addition to the not-so-great supply from OPEC, you have to look at the other side of the supply/demand, which is the demand. From here, you can see, we use more and more oil pretty much every year: http://www.aceee.org/transportation/tran鈥?/a>





Refining costs are relatively fixed and so are taxes. The only thing Exxon and gas stations really control is that last 5-10%. So, yes theoretically, Exxon could knock off a few cents off the price at the pump and operate at no profit, but it's a public company and they're going to keep doing what they've been doing for the last many years before all of this turmoil, which is mark it up 10% and sell it at market price.





Refineries haven't been opened in the last 30 years because for the last 30 years the government hasn't wanted them. This is across many administrations, so it's not really any one person's fault.





There's another good primer here that has most of the details on how gas prices are determined: http://www.eia.doe.gov/bookshelf/brochur鈥?/a>If Exxon pumps its own oil, refines its own oil and sells its own gas, why aren't Exxon gas stations cheaper?
I think it's usually environmental groups that block the construction of new refineries. I don't have specific sources on this, so I could be wrong. Report Abuse

The fact is that many of them could charge cheaper prices, but they sell if for the market price because they can. Their purpose is to make money, not lower gas prices. OPEC sets a price for oil, and the US companies charge the same since that is the going rate.
Its all about the MONEY. gas is a nessesity to ALL Of us. We cannot live without it. Per a friend of mine whos acct in shell. She says that SHELL has used the same amount of oil and produce the same amoutn of gas since the last past 2 yrs. This the reason for the shell billion dollar profit. Cause there spending budget has not change. Therefore it turns into profit. On the exxon side per a friend. Ethonal has been added to all gases beignning last month. If you see contructuion in gas stationg is becasue they are adding a ethonol additive to the gas to save the enviormment. Beaware this new additive does not stretch your gas. IT only helps the ozone. This ethonol additive is more expense to make in the summer season due to heat. cause the chemicals to be less than the are in the winter. So extra steps are taken. so the the gas and additives can with hold the summer heat. So you ask well why in states where is winter season round. is it cheaper NO. WHY? casue its all about money. Be aware there is not shortage. ONLY lies to the public, to cover high gas prices. Its not that bush wants money HE Has money. But the republicans and other people who aid in this are getting there cut as well. EVERYbody gettign rasing and bonuse and salary increase. When gas prices go down all these indidvuals can not roll S500 benz and 5.5 mill homes. So majority rules. HIGH GAS PRICES IT IS. these same indivials who are in this pool support the votes and pay off people to shut it up.


I say if you cannot beat them JOIN THEM. did you know the employees of shell and exxon has gas allowance provided to them by the company. therfor these people are not hurting at all. OTHER WISE you have strike from these employees.
The (EX?)CEO of EXXON (Lee Raymond) has $400 million retirement package. The company has record profits. Do the Math.





The Bush administration has ties with the Saudi royal family. The Saudis said they consider the Bush family part of their family. Dick Cheney made 8 million in stock sales. I know you do not want to hear it, but the current administration profits from oil sales.
Exxon does not produce all the oil needed to keep up with supply, therefore they must purchase from the OPEC countries at market prices. This price is passed on to the consumer.





There is no conspiracy amount oil companies, however, the OPEC cartel goes maintain some control over prices by having control over supply. No country to date has been brave enough to demand less cartel like activity from the OPEC countries.

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