Sunday, January 18, 2009

Oil Down,Gasoiline Up?

Here's a good summary on why.

Most people have no clue where there energy comes from or what it takes to make it and get it to them. People look at a complex mechanism in very simplistic terms. Just looking at Gasoline:

  • Oil has to be found. The cost of exploration is huge. It involves many man-hours of labor and expensive equipment. Maybe you find it, maybe you don't.
  • Once found, it has to be recovered. Recovering the oil involves, again, many man-hours of labor and really expensive equipment.
  • Oil is shipped to a refinery. Usually on a really big ship, costing hundreds of millions of dollars or through a pipeline costing hundreds of millions of dollars.
  • The oil has to be refined. In a refinery costing hundreds of millions of dollars, with many man-hours of labor.
  • The refined product, in this case gasoline, has to be shipped either by tanker truck or pipeline or both until it eventually gets to your corner gas station.

$2 a gallon is sounding more like a bargain all the time.

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