[BILL_THA_PHARMACIZT]

can sombody give a breakdown the refining and transportation costs involved minus "profit"


I know there are different grades of oil and of course its different depending on the distance involved...

just looking to get an idea ... so what does a barrel of U.S. consumed saudi oil look like divided up in terms of its refining and transportation costs minus profit - for example.

[BILL_THA_PHARMACIZT]

can sombody give a breakdown the refining and transportation costs involved minus "profit"


I know there are different grades of oil and of course its different depending on the distance involved...

just looking to get an idea ... so what does a barrel of U.S. consumed saudi oil look like divided up in terms of its refining and transportation costs minus profit - for example.

also in terms of gasoline costs as well....

[aldente]

The answer is NO, I at least am not able to supply you with the requested data but it is good to see you back on this forum.

[Devil]

If that mushroom is a boletus edilis, then I'd love it.

[BILL_THA_PHARMACIZT]

anyone..?

seems like a simple question sombody should have some insight on

[Shiraz]

I don't really know, but if I give you the numbers i've heard around, maybe someone who knows better will come in and correct it.

I heard Saudi Aramco give maybe 70c a barrel production cost from some of their best wells about 2 years ago. I think that's pretty hardcore, and it really depends what costs you count as to how it works out, but I've been told be independant people that 2-3 dollars per barrel is a better bet for the best saudi wells.

Now, that number itself doesn't really mean much. Economists will tell you that as far as price setting goes, the cost of the marginal barrel (last and most costly barrel) is most important. I don't really know what the worst fields in Saudi Arabia are costing, but basic econ tells us that the cost of the marginal barrel will be approximately equal in all provinces. This depends upon things like the "freeness" of the market and risk aversion of participants (or else "cost" is defined in these terms), but in any case, we can get a general idea from the prices bandied about in news stories about the smallest, most exposed, and least risk averse companies. The highest development costs I have heard are around the $25 dollar mark, so my guess is that's the approximate marginal barrel cost around the place at the moment.

As far as delivery costs go, well, the price of tanker hire has shot up over the past couple of years. Really gone crazy. I don't remember exactly but I think it's something like 2 or 3 times. I haven't heard numbers on this stuff for ages, but maybe it was a dollar a barrel or so to move the oil from the gulf to the US, so maybe now it's 2 or 3.

Hope that is pretty close.

Lastly, I don't know what you need these numbers for, but if you are planning to bash oil companies for milking profits (as so many are want to do at these times), then I'd point out that return on investment hasn't been great for oil companies if you average it over the past 20 years (or even less). A little common sense will reveal that whenever people are interested in oil price (ie. it's really high), oil companies' profits are high. Of course, when oil price is low (1990's), oil companies get killed but no one even notices. For this reason, it's been very easy for people to demonize oil companies over the years (well, that and the rather, erm, direct link to global warming industry) (and did I mention manipulation of politics) (and that thing about the dismantling of public transit infrastructure). Oh come on, nobody's perfect.

Almost forgot. About refining costs. Well, we saw gasoline close on Nymex the other day above $2 per gallon. With 42 gallon per barrel, we're looking $84 bucks a barrel of gasoline. So 84 less 67 equals 17 has to cover refining costs plus refinery profit. There are other issues like refinery gain, and these might put these prices out. It's even harder to guess cause the fears of shortage and limited refinery capacity might mean that most of this cost is actually profit. Anyway, I'd be inclined to guess 5-10 bucks a barrel refining costs based on this rough analysis.