teenyboone wrote:Advocate wrote:Should we engage in the drilling at issue, can anyone tell me about how much the price of gasoline will decrease?
I think it will be pennies.
Correct! A barrel dropped by 10 cents and the price dropped by 2!
Where's the fairness! When the oil companies shut down the refineries, they knew exactly what would happen to supply. A no brainer, but most Americans can't figure this out. I just happened to major in economics and watch the trends. Stockbrokers and speculators make thier money this way. :wink:
A barrel = 55 gallons. So when the price of a barrel of crude oil drops $1.10, the price of a gallon of crude oil drops $0.02: that is, the price of a gallon of crude oil drops 2 cents.
When the price of a barrel of crude oil = $132, the price of a gallon of crude oil = $2.34. Say about 70% of each gallon of crude oil is refined into gasoline. The rest is used to produce other products. The price of the crude oil to be refined into gasoline would be 70% x $2.34 =
$1.66 per gallon.
Add the cost of transporting that crude oil to a refinery, refining it into gasoline, transporting the gasoline, storing it, transporting it again, storing it again in gas station storage tanks, and pumping it into land, water, and air vehicles. Call all that added cost
G. Then Add to
G the
8% profit (i.e., multiply
G by 1.08) on each gallon of gasoline pumped into vehicles, plus the
$0.40 tax per gallon of gasoline.
So if the price of gasoline were
$3.90 per gallon, what would be the cost
G added to the crude oil to get it delivered to the consumer?
G WOULD BE:
1.08 x
G = $3.90 - $1.66 - $0.40 = $1.84;
1.08 X
G = $1.84;
G = 1.84/1.08 = $1.70
PROFIT,
P, added to the cost of delivering one gallon of gasoline to a consumer would be,
P = $1.84 - $1.70 = $0.14.
Gross profit per each one-billion gallons of gasoline delivered to consumers = $0.14 x 1,000,000,000 = $140,000,000.
Assuming a 30% corporate income tax, Net Profit per each one billion gallons of gasoline delivered to consumers = $140,000,000 x (1.0 - 0.3) = $98,000,000.
Taxes paid to the USA government per each one billion gallons of gasoline delivered to consumers = 0.3 x $140,000,000 = $42,000,000.
Not bad for government work! 
