| |
| Are $5.00 per
Gallon Gasoline Prices on the Horizon? |
| RV Investor - May 7, 2007 |
| |
| Crude oil prices account for over 50%
of the price of gasoline (Figure 1). But since 1998, the ratio of crude
oil to gasoline prices has increased from the range of 10-15X to nearly
30X (Figure 4). That increase has not been completely reflected in
prices at the pump. While most blame refining capacity, it is not the
whole story. It is true that gasoline prices correlate highly with crude
oil prices (Figures 2 and 3), but a simple analysis (Table 1)
indicates that $5.00 per gallon may not be that far away. If
distribution, refining costs, profits and taxes are kept constant, all
conservative (which usually means unrealistic) assumptions, then the
price of crude oil is not fully reflected in today's gasoline prices.
Even if oil prices stabilized, $5.00 per gallon at the pump may not be
far away. |
| |
| Figure 1 - Crude
Oil Component of Gasoline Prices |
 |
| |
| Table 1 - Price per
Barrel of Oil versus Price per Gallon of Gasoline |
|
Component |
2004 |
2005 |
2007 |
$5.00 |
|
Distribution & Marketing |
12% |
$0.22 |
9% |
$0.20 |
6% |
$0.20 |
4% |
$0.20 |
|
Refining Costs & Profits |
18% |
$0.33 |
19% |
$0.43 |
13% |
$0.43 |
9% |
$0.43 |
|
Taxes |
23% |
$0.43 |
19% |
$0.43 |
13% |
$0.43 |
9% |
$0.43 |
|
Crude Oil |
47% |
$0.87 |
53% |
$1.20 |
68% |
$2.29 |
79% |
$3.93 |
|
Retail Price |
100% |
$1.85 |
100% |
$2.27 |
100% |
$3.36 |
100% |
$5.00 |
|
|
|
|
|
|
|
|
|
|
|
Price/BBL |
|
$38.93 |
|
$47.47 |
|
$72.00 |
|
$72.00
|
|
Increase in Price/BBL |
|
|
|
22% |
|
52% |
|
0% |
|
Crude Oil Component |
|
$0.87 |
|
$1.20 |
|
$2.29 |
|
$3.93 |
|
Increase in Oil/Gallon |
|
|
|
38% |
|
90% |
|
72% |
|
| |
| Figure 2 - Price
per Barrel of Oil versus Price per Gallon of Gasoline |
 |
| |
| Figure 3 - Annual
Average Change in Price per Barrel of Oil versus Price per Gallon of
Gasoline |
 |
| |
| Figure 4 - Ratio of
Price per Barrel of Oil to Price per Gallon of Gasoline |
 |
