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Varchild2008 (83.60)

Pump Prices for Dummies Part 2

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March 12, 2012 – Comments (3)

1.  "Son, oil isn't gasoline."

And birds have wings.   Tell me something I don't know.

2.  A barrel of oil has gasoline in it, but it doesn't have 42 gallons of gasoline in it.

Of course it doesn't.  I thought this was already covered in my posts about how you can not assume a Barrel of Oil that costs $105 means Gasoline at the pump is $2.50. 

Quit pretending that I don't know this when I alraedy have shown that I do.  *Yawn*
I was responding in my 2nd post, "Pump prices for dummies," that there is a whole lot more to the story than just how much Gasoline you can get from a Barrel of Oil when it comes to pump prices.

3.  "Refining is the process by which the gasoline is separated from the other components of the oil, not a process by which gasoline is 'made' out of oil."

And Birds have Wings...  Tell me something I don't know.


4.  And refining doesn't get cheaper just because you 'standardize' the process somehow."

And that my friend is where you are absolutely wrong IKKYU.   Reformulations absolutely cost companies lots of money.  How do they not??

Actually, in the business world the biggest impact to reduce cost is standardizion.   The refining business is an excellent area where standardization saves money.

Read the following:

http://www.globalspec.com/FeaturedProducts/Detail/ParkerHannifinInstrumentationGroup/Gas_Blending_System_Reduces_Cost/186468/0

So IKKYU2 wants to tell me with a straight face that Parker Hannifin spent all of this Research and Development money and time to produce a product that NO ONE WILL WANT TO BUY????

What I am saying is that the article above is a Product that the company manufactured which helps Oil and Natural Gas companies reduce costs significantly in trying to dillute/blend mixtures of fuel out of the Barrels of Oil they purchase in order to meet EPA standards, fuel mixture standards.

Our Fuel Mixture standards that we have today aren't the same standards from when we ever had the needs for Gasoline Powered Vehicles.   No...  In fact since 2002 we have skyrocketed the number of mixtures from at least 18 to now more than 30.

Each time you create a new mixture standard in United States Congress, Legislation, that means Oil and Natural Gas companies have to spend research and development dollars figuring out how to comply with the mixture.  How do you "Blend and dillute" to create the mixture is the first expense they face.

Then they have to purchase the equipment necessary to produce the mixture. 

Parker Hannifin saw the problem and solved it.  The problem was these companies have to use multiple pieces of equipment for blending/dilluting, vice using 1 piece of equipment.

If you had to purchase 3 Tractors instead of 1 for your Farm, wouldn't that be expensive?
Say..... TRIPLE the cost of doing business?

Well anytime an OIL and Natural Gas company has to purchase new equipment because existing equipment is not capable of complying to brand new Fuel Mixture Standards, then that gets super expensive.

And since 2002....we saw fuel mixture standards...the sheer number of them Skyrocket.

5 "For instance, the idea that Exxon Mobil, a $200 billion market cap company, has never considered trying to reduce the costs of refining? Do you really believe that?" - IKKYU

What I believe is that Exxon Mobil doesn't have any say in how many reformulations have to exist in order to have a product for sale.  If EXXON MOBIL actually had a say then we would have a standardized approach.  No one wants to purchase unnecessary equipment and conduct research and development to comply with an ever growing list of mixture requirements.

Businesses would love to be in charge of their own industry's standards.   Business standards.

Yet in the Oil and Natural Gas industry they are not in charge of their own standards.

I guess this is BRAND NEW NEWS for IKKYU....  But here in America the Government regulates the Oil and Natural Gas industry heavily.  It is one of the most if not  THE MOST heavily regulated industry.

3 Comments – Post Your Own

#1) On March 12, 2012 at 5:04 PM, Varchild2008 (83.60) wrote:

About the only Standardization Oil and Natural Gas companies can do is to standardize the equipment and processes that it takes to comply with an ever changing, ever growing list of Regulatory Requirements.

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#2) On March 12, 2012 at 5:05 PM, Varchild2008 (83.60) wrote:

I can't believe IKKYU thinks that Refining Gasoline has absolutely ZERO cost to it.

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#3) On March 13, 2012 at 12:14 PM, ikkyu2 (99.29) wrote:

Oh, I don't think that - that's why I'm long GHM (Graham Corp.)  They lower the cost of refining and improve yields by helping refineries deal with the lower-quality feedstock ("sour" crude) which they are getting these days.

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