Fuel Price Dropping

[tcartwri]

However interesting to observe that while the barrel goes down in price the gal at the pump just does not follow suit at the same pace.

Do I really believe the explanation that they are refining yesterday's (costlier) barrel ?
Of course taxes are such a large component of a gal of gas that the barrel would need to be almost free B4 the pump gal would return to glorious days.

Because as Canadians a drop in oil prices usually means a weaker Canadian dollar. If we were on par with the US dollar we would likely be paying $0.80 L right now.

 

[yelbike]

Because as Canadians a drop in oil prices usually means a weaker Canadian dollar. If we were on par with the US dollar we would likely be paying $0.80 L right now.

I wish!

 

[300UGUY]

The oil sands of Canada can compete with any oil producer if we get pipelines from there to USA refineries, it should make North America oil independent. Last I worked there (2005), they could produce a barrel of cleaned sulfur free oil for around $25 per barrel which included all expenses related to production. Anything above that price was profit. The production cost rose about $1 per year while we were upgrading the refinery so now it might be as much as $35+ per barrel but still very profitable to produce.

That's kinda surprising, all the numbers I see for oil sand production say that $70 or $80 per barrel is necessary for production to be viable? I google it, see if I can learn more, Thanks!

 

[two_bit_score]

You would be correct that it is about $1 more than it is worth. That is because almost $1 of every gallon of fuel you buy is just taxes and fees, local, state, and federal.

I filled up on E85 the other day.... $2.13 a gallon. Don't have any choice but the diesel for my semi truck. But that's ok, I just charge a fluctuating fuel surcharge, included in the freight rate, to cover the fluctuating costs of the fuel. Remember that when you go to the store and buy something. The fuel surcharge thing is across the board thing in trucking, so don't think I am doing anything unseemly. It is just a standard freight rate practice throughout trucking. The FSC is based on $1.25 floor price of diesel and a average 6 mpg. So, if diesel is $3.60, I will include a per mile fuel surcharge of 40 cents a mile in the negotiated freight rate.

But that is business. What costs the business incurs, the consumer is the one that actually pays it.

A simple concept that seems extremely difficult for some to understand.

 

[tcreeley]

The oil sands of Canada can compete with any oil producer if we get pipelines from there to USA refineries, it should make North America oil independent. Last I worked there (2005), they could produce a barrel of cleaned sulfur free oil for around $25 per barrel which included all expenses related to production. Anything above that price was profit. The production cost rose about $1 per year while we were upgrading the refinery so now it might be as much as $35+ per barrel but still very profitable to produce.

China has contracted for the oil. At any rate the oil is sold on the world market- prices set there as well. It doesn't make NA energy independent- that would only happen if we had closed borders, tariffs, or had a way to undersell the world supply and buy only from ourselves.

 

[Gary Fowler]

That's kinda surprising, all the numbers I see for oil sand production say that $70 or $80 per barrel is necessary for production to be viable? I google it, see if I can learn more, Thanks!

SAGD (Steam Assisted Gravity Drain) oil recovery is likely what you are seeing for that price. This is done when the tar sands go too deep to surface mine. Where I was working, the tarsand was 19 feet below surface so they simply removed the over burden and strip mined the area, hauling the tarsand out in huge mining dump trucks and returning the clean sand via water/sand slurry pipelines. After the oil is completely removed and all the sands pumped back in, the top overburden soil is replaced and natural greenery replanted. Much cheaper than SAGD operations and recovery is at least 98% of the oil compared to about 10-20% in SAGD operation