Pain at the Pump

Discussion in 'The Lounge' started by Meezer_Man, Mar 29, 2019.

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  1. AzImport

    AzImport Living Customs Violation
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    I am going to require some GPS coordinates on this here gas station Neuroshima, for, ah... um... research purposes.

    Don't mind the 5 jerry cans behind me. Nope. Don't mind them at all.
     
  2. Larry M

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    We don't give out fishing spots and we don't give out stations locations. LOL
     
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  3. Neuroshima

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    There were 2 trucks in front of me with a couple of jerry cans. Smart!
     
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  4. jus bigguns

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    She completed a 51 miler in Palm springs last month. She has a new bike for this ride.
     
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  5. mcfish

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    Amazing how the refineries in California all have fires and maintenance issues the same time each year..the oil companies think we all fell off the turnip truck! Hmmmm, I guess they get away with raising prices every year..maybe we did fall off the freaking truck!
     
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  6. Werfless

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    Last I heard, they were blaming it on the flooding making ethanol and additives hard to cook down
     
  7. Bobber

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    She must be in fantastic shape! Good for her.
     
  8. jus bigguns

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    not bad for 58
     
  9. ScubaLee03

    ScubaLee03 Real Estate Broker
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  10. Bobber

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    58!? Just kill me now.
     
  11. DPevin

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    The oil companies have next to nothing to do with the gas prices. The refineries set the price they are willing to pay per barrel based off market value of the type of crude they are willing to receive. The oil companies have to sell at whatever price the refinery is willing to pay. There are plenty of times where the price of crude has dropped and the price of gasoline has actually gone up.

    Independent producers make up 70% of california's oil production as well as 90% of our natural gas production. None of those independent producers also refine. So "Big Oil" isnt so big, at least in california. Oil producers aren't the ones responsible for the high gas prices and they definitely aren't raising the prices of gas, or oil for that matter. Oil companies don't just decide they want to sell their oil for $100/bbl, the market decides the prices. If anything their goal of producing as much oil as possible would ultimately drive the price down (supply and demand). This is what happened in 2015 which oil took a dump, we had such a surplus and OPEC flooded the market with their reserves in an effort to put the shale companies out of business and it tanked oil prices.

    To a large extent the refineries aren't responsible for California's high gas prices either. In 2018 california's refineries had to import over half their crude oil from alaska and foreign producers (there is no pipeline from california to the gulf, so its cheaper to get the crude we need by tanker from alaska and other countries than by tanker from the gulf), which adds on to the cost. For example, right now california refineries are paying $72/bbl as opposed to $62/bbl for WTI crude like the rest of the country, because we are isolated from that supply.

    California's 17 refineries on average are capable of refining 2 million barrels of crude each day, which roughly works out to about 42 million gallons of gasoline produced each day. Only 12 of the 17 refineries are capable of producing our special california blend of gas. Conservative estimates are that californians consume 50 million gallons of gasoline per day. Since we only produce 42 million we have to import the difference. There are only few refineries outside of california that have the capabilities of producing our blend of gasoline. Domestically it comes from Washington state and the Gulf, but Eastern Canada, Europe, the Middle East and Asia are other sources. Obviously importing it drives up the cost as well. Since we are never producing enough of our special gasoline to meet demand we are constantly relying on imported gas to make up the difference. When demand spikes, the cost of importing the gas spikes as well.

    Because of our states regulations and how difficult it is to get permits new refining facilities are not allowed to be built to meet our growing demand for gas. This keeps our gas prices high. Between 1985 and 1995 10 refineries closed due to our states regulations which resulted in a loss of 20% of our refining capacity. At the same time existing facilities are not able to get the permits they need to do the work required to update their facilities to be able to refine our special blend of gas. This also keeps the price high. We are also on the verge of losing a couple of our refineries that have a capacity of 50,000 bbls per day or less because they just aren't doing well enough to keep operating. There are independent refineries in california just like independent oil producers. of the 17 refineries only 8 are larger companies such as Chevron, Shell, ect. And 4 of the 17 account for half of our refining capacity. (The torrence refinery that had the explosion being one of them). The issues, fires and whatnot are also in part due to the difficulty of getting permits to do remediation work.

    Roughly 70% of the price per gallon of gas is the price paid per barrel and the cost to refine the crude. The cost to refine is obviously higher than most states due to the reasons above.

    Of the remaining roughly 30% we have our stupid 13% gas tax and of the left over 17% there is 7% due to our states policies, cap and trade, cleaner burning fuel, low carbon fuel source...blah blah. So if you take $3.60 per gallon .72 of that is purely BS from our state....if we alleviated any of the issues above in refining our special blend of gasoline you would see gas prices fall in line with the national average which right now is like $2.70.

    Folks are real quick to jump on "Big Oil" for high gas prices, but like 1/3 of the cost of our gas comes from unnecessary BS imposed on us from our state.
     
    #31 DPevin, Apr 4, 2019
    Last edited: Apr 4, 2019
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  12. Werfless

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    Good on you for breaking that down, DPevin
     
  13. Meezer_Man

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    Saw on the internet they are thing about rising the fed tax on gasoline and diesel for bridges and roads. =^..^=
     
  14. DPevin

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    Full disclaimer, I started my career working for an oil company. I started working on production rigs (the rigs that fix existing wells), and i would do some tours on the drilling rigs here and there for extra cash. I have since moved into the office. Our company is unique in that we own and operate the the wells, but also own our own well servicing and drilling equipment. Normally that work is contracted out in the oil industry. Being in the office working with the engineers and geologists I have gotten to learn a lot about the business side and I mainly work on projects that deal with addressing the regulatory issues. Which suffice it to say, has not inspired much confidence in our regulatory agencies.

    I just know the refineries dictate to us when we can ship to them (we pipeline to the one we sell to) and it is usually once sometimes twice a week. They set the price for what they will pay us. We are subject to the whims of the market just like everyone else.

    I am probably biased a bit since I work in the industry, but everything I posted above are legitimate facts. You could probably draw different conclusions or opinions on how necessary all of californias extra fees/taxes on the process are, but its pretty hard to argue why our gas prices are so high, and most of the responsibility falls on the state.
     
  15. Werfless

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    Thanks for taking the time to spell that out. The wife works in the fuel delivery business, pretty damn amazing how much gasoline gets moved around, even by a small company with a dozen trucks or so, the numbers are staggering..
     
  16. DPevin

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    Yeah no worries. There are just a lot of inaccurate things out there about the industry. It can be frustrating. Don't get me started on frac'ing. haha

    It's insane. When you start to realize the volumes and dollars you are dealing with on a daily basis it can be a bit unnerving.
     
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  17. old_rookie

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    With these gas prices the roads better be in pristine conditions before the end of summer or I want my gas tax back.
     
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  18. mcfish

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    Thank you for the clarafications..I understand that our state's political morons are the reason our gas is more expensive than other states..I'm interested in why our gas price jumps $.30 in a month, and several California refineries just happened to be shut down the same month! Thanks for your insider input.
     
  19. old_rookie

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  20. DPevin

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    Yeah sure thing. It's kind of a complicated mess.

    You kind of already have the answer to your question. If refineries happen to be shut down, depending on which refineries, you are significantly decreasing the supply of fuel in the state. Remember, 4 of the 17 refineries in our state produce half the fuel every day. If any one of those go down, the supply would be significantly decreased and it would be reasonable to assume an increase at the pump.

    If they are shut down, its for sure not to drive the cost up $0.30 for awhile to make more money....they are losing money.
     
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