Re: Very OT: the price of gas

On Wed, 12 Oct 2005 22:06:42 -0400, "SandyG" <Mollypup1@xxxxxxxxxxx>
wrote:

>ZombyWoof wrote:
>> On Wed, 12 Oct 2005 06:41:47 GMT, "OldGoat"
>> <oldgoatmail@xxxxxxxxxxxxxxxxxx> wrote:
>>
>>> Hey folks,
>>> I know there's probably some place more appropriate for this
>>> question, but I wanted to see if anyone I know can explain it to me.
>>> When dealing with crude oil, the measurement use for quantity is a
>>> "barrel", right? Is this not your standard 55 gallon barrel?
>>>
>>> If it is, why are we meekly putting up all this money per gallon,
>>> when even a huge leap in the per gallon price, of say $10.00 per
>>> barrel, when spread equally over the 55 gallon barrel, comes to an
>>> increase of about 19 cents per gallon? I know there's beaucoup cost
>>> tacked on like refining and Uncle Sammy and the states take a good
>>> healthy bite of the oil apple as well as the oil companies.
>>> But at 20 cents per $10.00, a $70.00 barrel of unrefined oil (which
>>> is somewhere around $60.00 today) should be $1.40 a gallon. So the
>>> other HALF of the $3.00 per gallon is refining costs, (which
>>> pre-hurricanes, was the same cost as refining a $30.00 barrel of
>>> oil) Oil Company profits, and state and local taxes.
>>> Anyone know enough about commodities to set me straight? We can't be
>>> this collectively stupid. I know they're claiming losses of refining
>>> capabilities from the hurricanes, but there were major price leaps
>>> well before all that happened, blamed strictly on the greed of OPEC.
>>> It hasn't escaped my attention that The Prez is in to oil, either,
>>> so he's getting fat while`we have to choose between medications and
>>> having gas to drive to the doctors. Any contradictions to my
>>> assumptions are welcome.
>>>
>>> A painless day to all--og
>>>
>> Well let me try. First a barrel of oil contains 42 gallons not 55.
>> The conversion to gasoline depends upon several factors -- refining
>> efficiency, product mix desired by the refiner, quality of the crude
>> (amount of hydro-carbon molecules) to name a few.
>>
>> The amount of gasoline that can be distilled from crude depends on
>> where the crude is obtained. Venezuelan crude yields little gasoline
>> (about 5%), whereas Texas or Arabian crude yields about 30%-50%
>> gasoline. This is called "straight run" gasoline. However, the
>> distilled components of the crude oil can be further processed into
>> gasoline by various other methods (catalytic and thermal cracking,
>> hydrocracking, catalytic reforming, calculation, and polymerization)
>> to yield even more gasoline.
>>
>> According to the website Ask A Scientist; the typical US refinery was
>> putting out 47% of its crude oil input as finished gasoline. In other
>> words, 1 gallon of U.S.crude was resulting in 0.47 gallons of
>> gasoline. This is a rough conversion and it varies depending on
>> production rates, so it is not precise. Estimates can go higher or
>> lower depending on the technology employed at the refinery and the
>> hydro-carbon content of the crude.
>>
>> I know that doesn't give you your price per barrel fluctuation in pump
>> prices, but that is also a complex issue based on futures &
>> speculation. As the price of refined products go up usually the cost
>> of delivering them go up as well since most are trucked to their final
>> distribution point. That also applies to the crude coming in from the
>> fields with foreign crude coming in by ship which of course also burns
>> fuel. See the viscous circle? Using crude products to make and
>> deliver crude products to make & deliver more crude products. Seesh!
>
>See if you can answer this one --- why do they always attach a ".9" to
>the price? You know - like $2.79 9/10 They have done that for as long
>as I can remember, but who actually pays 9/10 of a cent? Why don't they
>just say $2.80?
>
I have absolutely no idea what so ever. But just for you I researched
the question since it is trivia and I love trivia. Back in the
1930's, fractional-cent pricing of gasoline was a routine matter
because of pricing laws.

In fact, it pretty much had to be! If retailers were constrained, and
could only raise prices by a minimum of a percentage, then a raise
from, say eight to nine cents a gallon would represent an increase of
12.5%. However, if they maximum they could raise the price was 5%
back then it meant it had to go up by less then a penny.

If a penny were the minimum price hike, then gas stations of the
1930's would find it impossible to raise prices by, say, only 5% as
constrained by law. So in the context of decades-old gasoline prices,
pricing involving fractions of a cent made perfect cents...er...sense.

Additionally gas isn't sold in even gallons. It goes out several
decimal places. Ever do a fill-up in perfectly even gallons? Most
people do it in even dollars, like give me five-bucks worth back in
the full service days. Well if gas was exactly $1.00 a gallon of
course you would get five gallons, but of course the tax man cometh
and with their X.x% tax added in you end 4.9876 gallons or something
like that.

Back in those days a penny was also worth something. You could
actually buy things with it. So representing prices as $1.99 made
something seem cheaper the $2.00. At several times there have been
discussion to drop the penny out of circulation. For the most part it
has been sales taxes that have kept it in place. Many OCONUS
(Overseas) US Military installations gave up penny pricing years ago
so that they would not have to deal with that aspect of currency.
Prices tended to end in a nickel to keep with the paradigm of $1.95 is
cheaper then $2.00.

Until a few years ago, stocks were routinely traded in units of an
eighth of a dollar (12 1/2 cents) or even 1/16th of a dollar (6 1/4
cents). Even today, now that trading has gone decimal, stocks can
still be bought and sold at prices that include a fraction of a cent.

Now where did all of this come from (this I know the answer too) the
American dollar was based on Spanish milled silver "dollars" which
were easily cut apart into equal "bits" of 8 pieces. One "bit" would
be equal to 1/8 of a dollar, and 2 bits would equal 2/8 (or 1/4 - a
quarter of a dollar). So, it is easy to see why the coins were called
"pieces of eight", and "2 bits" was commonly used to refer to 25
cents.

Does that even come close to answering your question?
--
Zombywoof

Si vis Pacem, Para bellum
.

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