There has been quite a bit of railing against the oil companies by the current administration. Claiming excessive profits. Maybe some facts would set the record straight. As you may know, a barrel of oil only contains 42 gallons of oil and out of that you only get about 20 gallons of gas and about 12 of diesel. All of that for $120. Yes, there are some other products but low cost.
But that is only part of the story. First, we need to define the kinds of oil because all oil is not created equal. Crude oil is described as being either “light” or “heavy.” Light oil flows easily, and it has a light color. It has a low sulfur content. Heavy crude oil is just the opposite. It has a higher sulfur and metal content, and it has to be heated up to become liquid.
Crude oil is further broken down as either “sweet” or “sour,” and no, it has nothing to do with the taste. “Sweet” crude oil has a lower concentration of sulfur compounds, while “sour” crude oil has a higher concentration of sulfur compounds. Different oil from all over the world is slightly different and must be refined differently.
That brings us to the next step which is the refinery. Oil can’t be made into anything useful until it’s refined. The refining of oil starts by boiling the liquid. This separates the oil into different gases and liquids. Crude oil is made up of hydrocarbons and breaks down into gases at different boiling points. The gases are captured in what refiners call the distillation column, As the gases rise, they begin to cool and condense back into a liquid. Each different liquid is then separated and further refined. Some elements of crude oil are also refined by cracking, which breaks down heavy oil molecules into smaller ones to create gasoline, low-quality diesel, or fuel oil. This makes a variety of different products.
Then the final product has to be transported to a city where a truck picks it up and delivers it to a station. The stations are mostly privately owned and must pay their bills and then add on government taxes. Who is making the most net off each gallon – the government!
The government leases the land, sells the permits to drill even if on private land, taxes the receiver on lease payments. Transported by pipeline, the use is taxed. Plus, fees for pipeline being on Federal land, property tax on private land. Property tax on refinery land. Sales tax on all sales to others. Tax on land the storage tanks sit on. Tax on trucks used to deliver to station both on fuel and on vehicle. The station land is taxed and all employees along the line pay government taxes. At the pumps, state and federal taxes plus local sales tax. I probably missed a few, but I think you see that the government is the big winner here. The big oil companies, pay tax on all they make and then send anything left after all expenses and taxes to the shareholders or invest in the future.
Do you still believe in what the government is telling you or the facts? Check it out for yourself.
Mike Young has been writing opinion articles for most of his life, having been published in multiple periodicals. He is the author of numerous articles and a book on Public Speaking. A member of President Bush’s task force on infrastructure protection for water and power systems, he is presently on the Board of Trustees for Overton Power District #5 as the Secretary/Treasurer. He currently resides in Mesquite, NV.