Texas Tea

I posted this explanation of how our oil prices work in a forum of mine to a misguided individual (who is but one among many) who just cannot seem to understand that the price per gallon that we're paying at the pumps is not the oil companies' fault.

This write-up has nothing to do with alternative forms of energy. I am 110% for alternative energy. However, I am NOT for choking ourselves out of the economic spectrum just to find it! I say DRILL for oil and provide incentives for those who can come up with an efficient and affordable means of energy in the meantime. It makes no sense to commit economic suicide while watching our competitors (China, India, and Russia....among many others) zoom straight past us at the speed of light.

People love to blame "big oil" and call this whole debacle we're in a "conspiracy." I have but one thing to say to those folks who refuse see the facts: Get educated.

Here is the explanation I offered. It is short and to the point. I didn't go into lots of numbers because it gets harder to understand when one does that. Hopefully my readers can take something from this (although, I'm almost positive that ALL my readers already know about the text to follow).


The "big oil" companies provide two things to you and I (the consumer):

---They provide a good (Oil)
---They provide a service (Means to find, extract, ship, refine, ship Oil...yes, shipped twice)

1) As oil is harder to come by today (legally, of course), it is harder to GET to the oil that we are allowed to go after. This means $$$
2) The oil companies must first find oil. $$$
3) Then, they must get to it. $$$
4) Then, they must extract it. $$$
5) Then, they must ship it to a refinery $$$
6) Then, they must pay to have it refined. $$$
7) Then, they have to ship it to you! $$$

This is all before it even gets into your gas tank!

As the demand goes up (countries such as China and India coming online) and crap starts happening in the region where most of the oil comes from (Iraq, Iran), the price goes up. It's now more valuable.
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Now, consider the following...

Companies such as GM, Walmart, Home Depot, Coldstone Ice Cream, etc, etc.... have a profit margin in the 20-30% range! That's good business.

Exxon-Mobile / Shell? 7%. Yes. SEVEN. If you know anything about business, you would know that this is a bad profit margin. It's profit, yes, but it's not much. The dollar amount is huge.... but you must remember the list above and how much it costs to do all those things.

The oil companies take around 8 cents per gallon (profit). That is all they make. CONGRESS, on the other hand, takes 20 cents of each gallon. You tell me who's getting rich. That's not even to mention the outrageous and totally uncalled for taxes that many cities and states put on that fuel (on top of what is needed for highways, DOT costs, etc).

Last year, Exxon-Mobile posted the HIGHEST income tax EVER for a company.

Think about that for a while...

Consider the following chart...



Additional Company Information

Is this becoming any clearer? To blame "Big Oil" is ignorant, irresponsible, and quite frankly, makes one look like a complete idiot...

Oil companies are easy targets, though... so that's why so many people like to poke at them, blame them for everything, and come out with these funny little documentaries about "evil big oil!"

You demand a product (oil). As more demand that product (China, India), the price goes up. As more environmentalist whackjobs prevent drilling in areas where we know there is oil (Continental shelf / ANWR), the price goes up.


(PS, before you accuse me of being "in the pocket of big oil," know that I'm not.... I'm a no one.... but I would happily accept money from them if they felt so inclined as to offer it to me!)