Think you pay a lot for gas? Think again

Last updated on: June 1, 2007 at 1:27 pm by voxnovablog

Think you pay a lot for gas? Think again 2007-06-01T13:27:00-05:00 voxnovablog

LOGO Patheos Explore the world's faith through different perspectives on religion and spirituality! Patheos has the views of the prevalent religions and spiritualities of the world.

Worried that we may soon have to pay $4/gal? Well, if we do end up paying that much, it seems that we would only be in the middle of the pack when we start looking at global gas prices:

Source: CNN Money

Netherlands, Amsterdam……………………… $6.48
Norway, Oslo………………………………………… $6.27
Italy, Milan…………………………………………… $5.96
Denmark, Copenhagen…………………………. $5.93
Belgium, Brussels…………………………………. $5.91
Sweden, Stockholm………………………………. $5.80
United, Kingdom London………………………. $5.79
Germany, Frankfurt……………………………… $5.57
France, Paris………………………………………… $5.54
Portugal, Lisbon……………………………………. $5.35
Hungary, Budapest………………………………. $4.94
Luxembourg…………………………………………. $4.82
Croatia, Zagreb…………………………………….. $4.81
Ireland, Dublin…………………………………….. $4.78
Switzerland, Geneva……………………………. $4.74
Spain, Madrid………………………………………. $4.55
Japan, Tokyo………………………………………. $4.24
Czech Republic, Prague……………………….. $4.19
Romania, Bucharest……………………………. $4.09
Andorra………………………………………………. $4.08
Estonia, Tallinn……………………………………. $3.62
Bulgaria, Sofia……………………………………… $3.52
Brazil, Brasilia……………………………………… $3.12
Cuba, Havana……………………………………… $3.03
Taiwan, Taipei…………………………………….. $2.84
Lebanon, Beirut…………………………………… $2.63
South Africa, Johannesburg…………………. $2.62
Nicaragua, Managua…………………………….. $2.61
Panama, Panama City………………………….. $2.19
Russia, Moscow……………………………………. $2.10
Puerto Rico, San Juan………………………….. $1.74
Saudi Arabia, Riyadh…………………………… $0.91
Kuwait, Kuwait City…………………………….. $0.78
Egypt, Cairo………………………………………… $0.65
Nigeria, Lagos……………………………………… $0.38
Venezuela, Caracas……………………………… $0.12

Boycotting gas stations is like attempting to boycott electricity

I received an e-mail yesterday from a friend of mine that showed “how we can get gas down back to $1.30.” The solution, according to the e-mail is “for the rest of this year, DON’T purchase ANY gasoline fromthe two biggest companies (which now are one), EXXON and MOBIL.If they are not selling any gas, they will be inclined to reduce their prices.”

Good luck with that.

First of all, let us understand that big oil companies such as ExxonMobil, Valero, ConocoPhillips, ChevronTexaco, and others are having record profits right now because of margins. If you talk to a refinery manager that is all you will hear about: margins. What is a refining margin? It is the difference between the wholesale price of gasoline and the market price of crude oil. Simple arithmetic tells us that if the price of crude oil is too high and the sale price of gas is not high enough, the margins can either be very low or negative. This is what happened in the 1980s to the refining business. Back then, refining companies had to recur to massive layoffs, because they were barely staying in business.

You also need to keep in mind that big oil companies are faced with many challenges that are primarily dictated by environmental regulations. In the past 5 years or so, refining companies have had to spend billions and billions of dollars to implement processes that reduce the sulfur in gasoline and diesel. This, in turn, reduces the amount of SO2 and SO3 released to the atmosphere everytime we drive our vehicles. When I worked in ConocoPhillips, I could see how the Research and Development department was also spending billions and billions of dollars in researching new processes for alternative fuels. These companies are not naive and understand the challenges that we have ahead of us: a potential regulation on fossil fuel production and consumption that would force a migration to alternative fuels due to concerns with global warming. Even though many people are uncomfortable with such high profits that these corporations are making, I can attest to the fact that this money is invested in further research and development (ok… probably after the big dogs get all their bonuses) and that there is no better time to do this than now.

And if you think you are hurting ExxonMobil when you don’t buy gas at their stations… well, you are not and you won’t. Here are my two cents from my post on Citgo, but also applies to ExxonMobil or any other oil company:

The truth behind boycotting CITGO

What happens when you don’t buy gas at Citgo stations?

First of all, gas stations are primarily owned by individuals and not by oil companies. Approximately 1-4% of branded gas stations are owned by the companies themselves, if that many, but why? Revenues from these facilities are minimal for oil companies to be worrying about paying the costs to maintain them. It’s just not practical and not necessary for big companies to own these businesses when individuals can very well take care of them. However, there is some sort of royalty that individuals have to pay to the company in order to keep a specific brand at their gas stations. When you compare the revenues proceeding from owning gas stations to those that oil companies have during the good times (when the oil is at over $50/bbl, not during the 80s when oil had crashed!) owning gas stations is simply not business-smart. That being said, the revenues, or lack thereof, from gas stations do not affect greatly oil company profits.

Are you buying CITGO gas at CITGO gas stations?

Not necessarily. In fact, you are not buying Shell gas at Shell gas stations either! How can this be? I mean by “CITGO gas” or “Shell gas” the “gas” which comes from a CITGO or Shell refinery, respectively. Yes, these huge facilities called refineries are the primary revenue for CITGO, in this case. Other integrated energy companies, such as ExxonMobil, ConocoPhillips, BP, Shell, ChevronTexaco, can get their revenues from their upstream operations (i.e. crude oil production) instead of their downstream operations (i.e. crude oil refining), but when refined product prices are adequate, refining margins can be high and hence, profits are high. Keep in mind that this is not always the case though as the oil industry in the 80s was very much struggling to make any profit due to low crude oil prices. Anyway, let’s say that you have two refineries in your area and one is CITGO and the other one is Shell. The CITGO refinery is capable of making all three grades of unleaded gasoline, whereas the Shell refinery can only make regular. To minimize transportation costs, which would ultimately translate in lower gasoline costs for you, usually the local refineries will provide gasoline and diesel to the local gas stations. Well, but you decide to boycott the CITGO station, because you read it on a blog, and go to the Exxon station to fill up your SUV with premium instead. Guess what! The gas you’re putting in your SUV is from the CITGO refinery and, therefore, CITGO is making money from it! Because remember, the hypothetical Shell refinery was not able to make premium gasoline. This scenario is actually true for the CITGO Lake Charles refinery in Louisiana. The only difference is that the Exxon gas you just purchased has additives that are specific to Exxon gas. Same goes for Chevron, Conoco, Phillips, Texaco, BP, or any other kind of branded gasoline.

This is how it works:Crude oil is processed in refineries. At the refinery terminals, there are different vessels holding the different additives for branded gasoline. So yes, the CITGO refineries are going to have all these other additives added to the gasoline produced in their refineries. Once the respective gasoline brands have their additives, they are distributed locally to their respective gas stations.

Economy

Katerina Ivanovna

Previous Post

May 31, 2007

Tribunal for Lebanon

Next Post

June 1, 2007 Convent sacked and occupied in Iraq

Browse Our Archives

Select a Category 2019 A Consistent Ethic of Life Aaron Weldon Abortion absurdity Abuse Scandal Academics Adoption Advent Africa agreement/disagreement with Church teaching Alexander Schmemann Alexham Alterity America Amnesty International Anarchism angels Anglicanism Animals Annual Statistics Anthony Anxietas Apocalyptic Apophatic Appalachia Aquinas Art Atheism Atonement Augustine Authority Baptism Beauty Bible biblical criticism biblical scholarship Bioethics Bishops Black Catholics Black Theology Blackadder Blogs Books Breastfeeding Brett Salkeld Buddhism Bush administration Byzantine Catholic Calvinism Canada Canon Law Capital Punishment Capitalism Caryll Houselander Catholic Blog Awards Catholic Blogging Catholic League Catholic Social Teaching Catholic Worker Movement Catholicity CFL Charity Children Chris West Christ and Culture Christian Democracy Christian Unity Christmas Christology Church Church Doctrine Church History Climate Change Cohabitation Colbert Collegiality Communion Communism Comparative Theology Competition Conferences conscience conscience rights Consequentialism Consistent Life Ethics Consumerism Contraception Contrition Conversion Converts Coptic COVID-19 Creation Critical Thinking Cross Cuba Culture Culture of Death Culture of Life Darfur David Cruz-Uribe David Wheeler-Reed Death Death Penalty Democracy Demons Desert Fathers Devil Dialogue dignity Disability Disarmament discernment Discipleship discrimination Dissent Distributism Division Doctrine Domestic Church Dorothy Day Double Effect Doubt Down syndrome Driving Early Church Easter Eastern Churches Ecclesiology Economics Economy Ecumenism Education El Salvador Election Election 2020 Ellul Embryonic Stem Cell Research Empire Energy Enlighenment Environmentalism Ephraim Radner Episcopal Church epistemology Equality Eschatology Ethics Eucharist Europe Euthanasia Evangelization Evil Evolution Excommunication F.X. Durrwell Facism Facts Fair Trade Faith Family Fashion Feddie Feminism Feminist theology Fertility Fetal Rights Fiction Film Finances First Things flags Folk Religion Food Foreign Affairs Forgiveness Frank Sheed Free Speech Freedom gay & lesbian persons Genocide George W. Bush George Weigel Gerald L. Campbell Girard/Mimetic Theory Global Warming Globalization Gnosticism Good Friday Grace Gratitude Greed Grey Cup 2009 Guadalupe Guest Post Guest Posts Gun Control Gustave Martelet Habitat for Humanity Hans Urs von Balthasar Harry Potter Hate Speech Health Health Care Healthcare Heather King Hebrew Bible Henri de Lubac Henry Karlson Herbert McCabe Heresy HHS Mandate Controversy History Holidays Holiness Holy Spirit Homiletics Homily Homosexuality Hope Hospitality How Far Can We Go? How Far Can We Go? Human Person Human Rights Humanae Vitae Humility Humor Hunger Hunting Identity Idolatry Ignacio Ellacuría Imagination Immigration In Memoriam Income Inequality Inculturation Indigenous People Individualism Inklings Intellect Interdependence Internet Interpretation Interviews Introduction Iraq War Islam Israel Jain James Alison James Martin Jazz Jesus Christ Jews Joe Biden Joe Hargrave Johann Baptist Metz John Allen John Henry Newman John Paul II John the Baptist John XXIII Jonathan Josef Pieper Joseph (the husband of Mary) Joseph Bernardin Joseph Ratzinger Josh Brumfield Journals Joy Judgment Just War Justice Kari Lundgren Karl Rahner Katerina Ivanovna Kenya Keynes Kingdom of God Kyle R. Cupp Labor Language Latin America Law Leanne Ogasawara Legion of Christ Leisure Lent Liberalism Liberation Theology Libertarianism Libya Lies Life life & dignity & responsibility of the human person Literature Little Way Liturgical music Liturgical Year Liturgy Living Simply Living Wage Local Church Lombard Lord of the Rings Louis Dupre Love M.Z. Magic Magisterium Mark DeFrancisis Mark Gordon Marriage Martin Luther Martin Luther King Jr. Martyrdom Marxism Mary Masculinity Matt Talbot Matthew Fish Matthew Levering McCain Media Memorial Day Mennonites Mental Illness mercy Michael Iafrate Middle East militarism Miroslav Volf Mitt Romney Modesty Moral Theology Morality Mormonism Morning's Minion Mother Teresa Music Muslims Natalie Nate Wildermuth Nationalism Native Americans Nature Nazis Neuhaus New Evangelization New York City News NFP nihilism Nonviolence Not Abortion Nova's Ordo Nuclear weapons Nuns Obama Occult Old Age Opus Dei Ordination ordination of women original sin Orthodoxy Oscar Romero Other Voices Pacifism Palestine Palin Papacy Papal Peace Messages Papal Social Encyclicals Particular Affections Partisanship Patriotism Paul Paul Ryan Paul VI Peace Pentimento persecution Personalism Phantastes Philosophy PKD Planned Parenthood Pluralism Poetry Policraticus Politcal Apathy Politics Poll Pope Benedict XVI Pope Francis Pope John Paul II Pope Leo XIV Population Postcolonialsim Poverty Power Prayer Preaching Predictions Predictions for 2012 President Barack Obama priestly formation & discernment Pro-Life Progress Prophetic Witness Proportionalism Public Diplomacy Public Policy Question Quotes Rachel Maddow Racism Radical Catholic Mom Radical Catholicism Raymund Schwager Real Catholic TV Real Presence Reconciliation Reginald Garrigou-Lagrange Religion religious freedom Responsibility Ressourcement Resurrection Rick Garnett Ridiculous Crap You Never Thought You'd See Robert Barron Roe v. Wade Roman Curia Rome Russia Sacraments Saints Salvation History Sam Harris Sam Rocha Same-sex Marriage Saskatchewan Roughriders Satire School of the Americas Science Scripture Seamless Garment Second Vatican Council Seeing Sex sexual violence Sexuality Sia Sin social justice Social Security Socialism Society of Jesus Sofia Loves Wisdom Solidarity Sophia soteriology Soutenus Spirituality Sports St. Dismas St. Joseph Stanley Hauerwas Statistics Stimulus Suffering Sunday Reflections Supernatural Supreme Court Symbolism Syria Taxing Technology Terrorism The State The Tea Party The Trump Administration Theological Anthropology Theology Theotokos Thomas Merton Throwaway Culture Tim Muldoon Tim Riley Tim Tebow Time Titian Tolkien Torture Toys Trade Traditionalism Transgender Transportation Transubstantiation Trinity Truth TV U.S. Affairs Uncategorized Unions unity among people who disagree US Catholicism USCCB Usury Utilitarianism Utopia Valentine's Day Vatican Vatican II Veterans Vicarious Suffering Video Violence Virgin Mary Vocations Voluntary Associations Voluntary Poverty Voting Vox Nova vox nova blog war War and Peace War Strategy Wealth Weirdness Welfare state Women Women Priests Work Woundedness Youth

Select a Month June 2026 May 2025 February 2025 January 2025 July 2024 May 2024 April 2024 March 2024 February 2024 January 2024 December 2023 July 2023 March 2023 January 2023 December 2022 November 2022 October 2022 September 2022 August 2022 July 2022 June 2022 November 2021 September 2021 July 2021 June 2021 May 2021 April 2021 February 2021 January 2021 December 2020 November 2020 October 2020 September 2020 August 2020 July 2020 June 2020 May 2020 April 2020 March 2020 February 2020 January 2020 December 2019 November 2019 September 2019 August 2019 July 2019 June 2019 April 2019 March 2019 February 2019 January 2019 December 2018 November 2018 October 2018 September 2018 August 2018 July 2018 June 2018 May 2018 April 2018 March 2018 February 2018 January 2018 December 2017 November 2017 October 2017 September 2017 August 2017 July 2017 June 2017 May 2017 April 2017 March 2017 February 2017 January 2017 December 2016 November 2016 October 2016 September 2016 August 2016 July 2016 June 2016 May 2016 April 2016 March 2016 February 2016 January 2016 December 2015 November 2015 October 2015 September 2015 August 2015 July 2015 June 2015 May 2015 April 2015 March 2015 February 2015 January 2015 December 2014 November 2014 October 2014 September 2014 August 2014 July 2014 June 2014 May 2014 April 2014 March 2014 February 2014 January 2014 December 2013 November 2013 October 2013 September 2013 August 2013 July 2013 June 2013 May 2013 April 2013 March 2013 February 2013 January 2013 December 2012 November 2012 October 2012 September 2012 August 2012 July 2012 June 2012 May 2012 April 2012 March 2012 February 2012 January 2012 December 2011 November 2011 October 2011 September 2011 August 2011 July 2011 June 2011 May 2011 April 2011 March 2011 February 2011 January 2011 December 2010 November 2010 October 2010 September 2010 August 2010 July 2010 June 2010 May 2010 April 2010 March 2010 February 2010 January 2010 December 2009 November 2009 October 2009 September 2009 August 2009 July 2009 June 2009 May 2009 April 2009 March 2009 February 2009 January 2009 December 2008 November 2008 October 2008 September 2008 August 2008 July 2008 June 2008 May 2008 April 2008 March 2008 February 2008 January 2008 December 2007 November 2007 October 2007 September 2007 August 2007 July 2007 June 2007 May 2007

TAKE THE

Religious Wisdom Quiz

Who said, "Your people will be my people and your God my God"?

Select your answer to see how you score.

Ruth Bathsheba Leah Esther