Tracking the High Cost of Gas 

Tracking the High Cost of Gas

Mississippi - Most of us are sick of paying those high gas prices. Have you ever wondered just what exactly you're paying for when you fill up?
First stop: the Chevron Refinery in Pascagoula. Mississippi. This is literally where the story begins. along the Mississippi Sound. which is along the Gulf Coast.
You have a tanker. with the crude oil in it. It will actually go into pipelines here at this refinery in Pascagoula. and there are tons of pipelines. to say the least.
"There are 18 grades of gasoline that have to be made.' said Roland Kell. Chevron General Manager at the Pascagoula Refinery. 'You can't just take crude oil and put it into a motor vehicle..."
The costs at the refinery are roughly 13 percent of the price you pay at the pump. So 60 percent is the cost of oil. and now 13 percent is refinery costs. Once done here. the oil leaves Pascagoula and heads through underground pipelines about 200 miles north to Collins. Mississippi.
And so we've made it to Collins. Mississippi. The gasoline is stored here in huge storage tanks. Five million gallons of gasoline. And then what happens? the truckers become involved. It's where they start to fill up.
"This is where the consumer sees it leave until it gets to a retail station.' said Jeffrey Walls. Chevron Terminal Manager at Collins. Mississippi. 'They see the transport trucks that come in here day by day. which load the product that actually comes to the communities in which they live."
At this stage. the wholesale price is set. It's also known as the rack price. This is the price the gas station owner actually pays for the gas. Included in this price is the oil companies' profit. roughly about four cents per gallon. depending on the market at the time.
The gas station owner now adds distribution and marketing costs. In other words. the gas has to be transported to his service stations. so there's a cost in that. Plus. the dealer has to advertise and pay licensing and insurance fees. plus add some profit. which is usually not more than a few pennies per gallon.
So add that up and it comes to about seven percent of the total per gallon cost. That means 60 percent for oil. 13 percent for refinery costs. and seven percent for distribution and marketing.
The truckers typically go back and forth from the terminal to the service stations a few times a day. we're on our way to Hattiesburg. about 20 miles from the terminal.
Once the trucker arrives. it's time to unload the gas. It's a delicate procedure. The biggest oil dipstick you'll ever see is used. to make sure moisture hasn't built up in the pipelines underground. Well. now that the gas is here at the pump. let's go back to our cost assessment
The oil. and marketing costs added up to 80 percent. So what about the other 20 percent? That's where federal. and local governments take their share. because taxes make up the rest.
So while oil companies say they get around four cents a gallon. the government is taking 14 times that amount. Here in Hattiesburg on this day. the price per gallon is $2.77 per gallon. So using those percentages. 36 cents in refinery costs. 20 cents in distribution and marketing. but what about the guy across the street? and in California. it can all get pretty complicated. but here are a couple of possible reasons. The service station across the street may be cheaper because it may be an 'unbranded" station.
In other words. it's selling a cheaper gasoline. a "generic" gasoline. not the Chevron type gasoline that has a special additive in it that cleans your fuel system. Shell. Exxon and others also all have their own additives.
Then there's zone pricing. You could have service stations a mile or two apart or even right across the street from one another. but they are in different zones and that means different prices.
While prices are high everywhere. it's really bad in California. That's because taxes are higher there. Also. they're somewhat isolated from the maze of pipelines coming out of the Gulf Coast. so transportation costs are higher.
And then there's the fact that because of California's air pollution problems. they have to use a special clean-burning fuel. Same thing for many cities on the East Coast too.
"In a rural part of America. you can use a bunch of different types of gasoline.' Nesterak said. 'In a place like Baltimore or a place like Washington. you have to use a reformulated gasoline and the components go into that reformulated gasoline are very. very costly."
Trying to figure all of this out can be challenging. Even Albert Einstein may have some difficulty. The only thing we know for sure is that gas prices are driving us nuts.





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