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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: Think4Yourself who wrote (58929)	1/22/2000 6:03:00 PM
From: Razorbak	Read Replies (1) \| Respond to of 95453

Crude & Gasoline Costs If crude is $26 a gallon Crude is currently over $28/bbl, which is equivalent to $0.67/gal. [$28/bbl]/[42 gal/bbl]=$0.67/gal. Razor

To: Think4Yourself who wrote (58929)	1/22/2000 8:50:00 PM
From: edward miller	Respond to of 95453

You are completely upside down on this, and I will use your numbers to prove it. Your argument assumes that $0.70 of the current cost of gasoline (I assume you mean retail) is the cost of crude. If you look at Friday's close (using cnnfn.com) I see the price per gallon as $0.77 on the futures market. Close enough. Since the retail price is around $1.20 to $1.30, roughly, then there is about $0.43 to $0.53 in other costs that have not tripled in price. If you cut the $0.77 by 1/3 you get $0.26. Add in the other $0.43 to $0.53 and you get gas at $0.69 to $0.79 at the lowest price point last year. Off by a little, but close enough considering the errors. The reason the number do not come out exactly is that you are assuming today's spot prices for the cost of gasoline, which is totally bogus. We are buying gasoline at the pump which was bought several months ago, not a spot prices, but at contract prices. The last numbers I have seen (at SI, indirectly in posts related to CPI numbers) are still under $21 per barrel. This also means that the CPI has not yet reflected the crude price move, but that is another story. So if you use $21 per barrel instead and back into the price the same way, you will find that 1) the costs other than crude are a higher percent of the retail cost, and 2) you will see the pricing is consistent with the refineries and others not "eating" the price increase. BTW, I'd assume about $10 for the lowest cost of crude last year. Now if you start from today's spot crude prices and go up 3X from here, then you are talking a whole different ratio because crude is now the majority of the price. It was not, at the bottom, last year. The whole point is that nobody in the oil supply chain is getting clobbered by price increases that they can not pass to the customer. That was my objection.