The Costs of Producing Motor Fuel

Jim Geraghty, the energy expert at National Review, said last week that ‘U.S. refineries are running at full capacity, or just short of full capacity. This is why oil from the Strategic Petroleum Reserve releases got sent to Europe and Asia, because they had the room and equipment to turn it into actual usable fuel. The U.S. currently has no more spare ability to turn the oil from the reserve into stuff that will actually make your car move; yelling at the oil companies isn’t going to change what is fundamentally an engineering problem.’

This lack of capacity is exacerbated by two policy choices. First, the U.S. almost never builds new oil refineries on its own soil anymore. The second problem is that, in addition to not creating new capacities, old ones are being taken offline and turned into biofuel-processing plants — again, in response to the contention of Democratic policymakers that fossil fuels are obsolete and ‘alternative fuels’ are the way of the future.’

“As of August, the cost of crude was 57 percent of the cost of a gallon of regular unleaded gasoline, and the cost of refining it was 15 percent. Another 15 percent went to distribution and marketing, and 13 percent of the cost, on average, went to taxes. For diesel, 45 percent is the cost of crude, 26 percent is the cost of refining, 17 percent is distribution and marketing, and 12 percent goes to taxes.”


Please check your e-mail for a link to activate your account.

Enter Comment Here: