If that were the major cause, then why is SD67 paying $1.55 a litre? (Roughly $6/gal)
Maybe Australia, like the countries in Europe, has a much higher gas tax.
8 Cents on a $4 / gallon is an abysmal 2% profit margin.
Yep, that's the way it works for the marketer/retailer (not the integrated oil companies themselves that do little actual gasoline selling and are running as fast as they can away from this sector of the industry). That's why the convenience store, car wash and food service programs are so important for SURVIVAL in the industry today. It is not percentage based. A marketer/jobber can at times "gouge" as much as 30 cents or slightly more flat rate per gallon for several weeks (still in the 10 percent or less range of total cost per gallon). Or, on the other side, break even or sell at a slight loss for several weeks depending upon the players in the markets and their supply deals and the price on the street and the volume vs margin equation where volume = customers. Sometimes you have to match the low guy to keep your customers even if he is breaking even and you are losing 2 cents per gallon.
The oil companies on the other hand control the price of the gallon.
No they don't. Oil is a commodity and the bulk of the price reflects the cost of crude oil and that is set in the various energy markets. The oil producing countries and OPEC can influence the price of oil by adjusting supply relative to demand. That can also happen through natural changes in the market that are outside of expectations. Beyond that, the commodity markets -- traders -- set the price of oil and refined products just like they do with oranges, corn and pork bellies based upon greed, fear, herd behavior and voodoo. The oil companies benefit
or not depending upon the markets. No one was complaining throughout much of the 1990s when oil was below $20 per barrel ad the oil industry lagged most other industrial sectors and no one wanted to invest in it because of the poor returns.
Of course, when the gas was cheap the same people complaining now went out and bought big trucks to use as the daily commuter vehicle and helped created the prices we see today. We consume more oil than any other country in the world, and more than the next four countries combine. Most of that goes to motor fuels. Duh. One reason for that is back when oil was cheap and gas cheap, the Europeans added huge taxes to both pay for their social programs and encourage efficiency. The Smart Car exists for a reason, and that does not involve the joy of the open road
Here's a nice primer showing the cost components of a gallon of gas.
http://www.eia.doe.gov/bookshelf/brochures/gasolinepricesprimer/eia1_2005primerM.htmlOn a final note, about 30 percent of the cost of a US gallon of gasoline is related to the devalued dollar. About $30 on a $115 bbl of oil.
Charon
