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Who actually buys crude oil?

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Nephasth:
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Donkbaca:
I used to lay pipe all the time at crude oil wrestling night in my cantina


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MonMotha:

--- Quote from: Nephasth on March 19, 2011, 10:46:29 am ---
--- Quote from: MonMotha on March 05, 2011, 10:37:48 am ---FYI, retail margins on gasoline are often less than $50 on an entire tanker load.
--- End quote ---

WRONG. Trucking companies will send trucks hundreds of miles or more out of the way to save a couple pennies per gallon. The average load is around 7300 to 8000 gallons. At just a penny per gallon that's $73 to $80. If a supplier is offering a product for 10 to 15 cents less than other suppliers (to move old product out of storage most likely) that's $730 to $1200 the trucking company can make extra off of just one load. On a busy day, my terminal will load 60-80 trucks (and we're considered a small volume terminal). Terminals around big cities will load hundreds of trucks per day.

What most people don't realize is that there is more than one middle man. And most "big oil companies" don't own the pipelines that is used to move the product. Far greater volumes are moved through pipe than by truck. Pipeline companies charge suppliers (oil companies) per barrel moved through their pipe. It's only around $0.30 per barrel, but they can move over 24,000 barrels per day through an 8" pipeline (refined products) and that is on only a small segment of pipeline. Then there are terminals, facilities that store  millions of barrels of oil and refined products. One pipeline company buys and stores crude oil in HUGE volumes, and they wait, until prices go up and profit like crazy.

--- End quote ---

You're telling me that people will send a truck that gets single digit miles per gallon "hundreds of miles out of the way" at $3.5+/gal while paying the driver, too, just to save ~$100 or less on the price of the cargo?  This seems...dumb.  In fact, it's downright wrong.  I'll be optimistic and say that tanker averages 10mpg on the trip (half of it loaded, half of it unloaded).  At $3.5/gal for fuel for the truck (I'm figuring tax exempt diesel at less than retail price), it costs $0.35/mi driven extra that you go to get it from "wherever's closest".  The break even point, assuming you save $100 by going "out of your way", don't pay the driver, and incur no expenses on the vehicle (to include wear and tear as well as depreciation) is 285 miles round trip or 142.5mi "out of the way".  A significant distance, but not "hundreds of miles", and that's a pretty optimistic scenario.

I got the $50 figure from a filling station operator saying that they lost money on the tank load if one customer drove off without paying.  Note that's probably referring to THEIR tank which may be smaller or larger than the tanker that supplies them.  Is it an exaggeration?  I don't know.  It seems perhaps "difficult to believe" but not totally out of reason.  Retail gasoline can get pretty cut-throat.  There's often several filling stations on a corner, and people are usually willing to drive across the street to save even a cent or two per gallon, if only for the "principle of the matter".  Remember, this is the RETAILER'S margin on the gasoline.  There is of course margin at each step along the way to that point, as well.

Nephasth:
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danny_galaga:

--- Quote from: Nephasth on March 22, 2011, 07:21:40 am ---
Looking at the retail margins. A gas station orders a full load of fuel, let's say at $3/gal just to keep things simple. 8,000 gallons (a full load) would cost the gas station $24,000. To earn their stated $50 on the whole load, they would only mark the gas up $0.00625/gal. Who in their right mind would spend $24,000 to make $50? To make $1000 off the load they would only need to mark it up $0.125/gal which seems reasonable considering current gas prices.

--- End quote ---

That sounds in the ballpark. When I worked at a Mobil service station, the mark up was roughly 5c/ litre, maybe a bit less. So a full load I guess is roughly 30,000 litres. Times 5 cents, is, err, carry the one...

1500 bucks. Per load. Still peanuts, but more than 50 bucks that's for sure!

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