Gas Prices Across the Country
December 22, 2007
The new legislation to input ethanol comes from environmental standards
that have been in place in some parts of the country for several years.
In some areas, gasoline was required to meet higher environmental
standards in order to reduce the amount of smog created by burning
gasoline. Producing this cleaner-burning gasoline caused problems in
refining, distribution and storage, which increases the cost of gas.
“The result of this targeted approach to air quality has been to create
gasoline market islands,” John Cook, director of the petroleum
division of the DOE’s Energy Information Administration, said before
the U.S. House of Representatives Committee on Energy and Commerce on
May 15, 2001.
Cook pointed at California and the Chicago and Milwaukee areas as primary examples of gasoline-market islands.
The clean-burning requirements in each of these areas are unique to
that individual area, and only a few refineries can produce the
specialized products. High demand, a supply problem at a refinery or a
problem with a pipeline can cause pricing in these areas to surge.
In California, the state government has set its own
reformulated gasoline rules that are stricter than the federally
mandated clean-gas laws. This is why Californians pay a higher price
for cleaner fuels — this, plus a local sales-and-use tax of 20
percent, an 18.4-cent-per-gallon federal excise tax and an
18-cent-per-gallon state excise tax. California’s distance from the
refineries located near the Gulf of Mexico can also add to the cost of
gasoline if it chooses to obtain gas supplies from those refineries.
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Photo courtesy Phillips Petroleum Company |
The other area where prices can far exceed the U.S. national average is the Midwest.
In 1999, the Midwest region became subject to new reformulated gasoline
rules. The Midwest uses a special gasoline that is produced using
ethanol instead of methyl tertiary butyl ether (MTBE). Ethanol
is used in the Midwest because of the region’s abundance of corn, which
is the main raw material used to make ethanol. Few refineries outside
the region produce this type of reformulated gasoline, which means
there may often be a limited supply of the product. This is the same
problem resulting from the nationwide call for ethanol brought in the
spring of 2007.
Crude oil inventories have the single biggest effect on gas
prices, and the United States depends heavily on foreign oil supplies.
In January 2006, the United States imported over 9.1 million barrels
per day [Source: EIA].
We’ll look at exactly where that crude oil comes from next.
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Breakdown of Gas Prices
December 21, 2007
When you pump $20 dollars into your tank, that money is broken up into little pieces that get distributed among several entities. Gas is just like any other consumer product: There’s a supply chain and several groups who are responsible for setting the price of the product. The media can sometimes lead you to believe that the price of gas is based solely on the price of crude oil, but there are actually many factors that determine what you pay at the pump. No matter how expensive gas becomes, all of these entities have to get their slice of the pie.
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Let’s look at where your money goes when you pay for gas: Crude oil - The biggest portion of the cost of gas — as of April 2007, that’s about 50 percent — goes to the crude-oil suppliers. This is determined by the world’s oil-exporting nations, particularly the Organization of the Petroleum Exporting Countries (OPEC), which you will learn more about in the next section. The amount of crude oil these countries produce determines the price of a barrel of oil. Crude-oil prices averaged around $37 per barrel (1 barrel = 42 gallons or 159.6 L) in 2004 (Source: U.S. DOE). And, after Hurricane Katrina, some prices were almost double that. In May 2007, crude-oil prices averaged around $60 per barrel (1 barrel = 45 gallons or 159.6 L). Sometimes, gas prices go up even though there is plenty of crude oil on the market. It depends on what kind of oil it is. Oil can be classified as heavy or light, and as sweet or sour (no one actually tastes the oil, that’s just what they call it). Light, sweet crude is easier and cheaper to refine, but supplies have been running low. There’s plenty of heavy, sour crude available in the world, but refineries, particularly those in the U.S., have to undergo costly retooling to handle it.
- Refining costs - The refining of crude oil makes up about 28 percent of the price of gasoline.
To learn more about oil refining, read How Oil Refining Works.
- Distribution and marketing - Crude oil is
transported to refineries, and gasoline is shipped from the refineries
to distribution points and then to gas stations.
The price of transportation is passed along to the consumer.
- Marketing the brand of the oil company is also added into the cost of the gasoline you buy.
Together, these two factors account for about 8 percent of the price of gasoline.
- Taxes - Taxes, including federal and local, account for about 14 percent
of the total price of gas in the United States. Federal excise taxes
are 18.4 cents per gallon, and state excise taxes average 18.2 cents
per gallon. There may also be some additional taxes, such as applicable
state sales taxes, gross receipts taxes, oil inspection fees,
underground storage tank fees and other miscellaneous environmental
fees. Add that to the state excise taxes, and it can average 27.4
cents. It could be worse. In Europe, gas prices are far higher than in
America because taxes on gas are much higher. For example, gas prices
in England have risen as high as $6.65 per gallon, with 78 percent of
that going to taxes.
- Station markup - While it isn’t represented in the
diagram above, of course some of the actual money you spend at the pump
does go to the service station. Service stations add on a few cents per
gallon. There’s no set standard for how much gas stations add on to the
price. Some may add just a couple of cents, while others may add as
much as a dime or more. However, some states have markup laws
prohibiting stations from charging less than a certain percentage over
invoice from the wholesaler. These laws are designed to protect small,
individually-owned gas stations from being driven out of business by
large chains who can afford to slash prices at select locations.
Gas prices also vary from state to state for several reasons.
Taxes are probably the biggest factor in the different prices around the country.
Additionally, competition among local gas stations can drive prices down.
Distance from the oil refineries can also affect prices — stations closer to
the Gulf of Mexico, where many oil refineries are located, have lower
gas prices due to lower transportation costs. There are also some
regional factors that can affect prices.
World events, wars and weather can also raise prices. Anything
that affects any part of the process, from the moment the oil is
drilled, through refining and distribution to your car will result in a
change in price. Military conflicts in parts of the world with lots of
oil supplies can make it difficult for oil companies to drill and ship
crude oil. Hurricanes have damaged offshore drilling platforms, coastal
refineries and shipping ports that receive oil tankers. If a tanker
itself is lost or damaged, or leaks its oil into the ocean, that will
put a dent in the market as well.
· · · · ·
The most recent surge in gas prices is due to several factors,
including all of those listed above. However, a new reason emerged
during the spring of 2007: legislation out of Washington to incorporate
more ethanol into transportation fuels. There has been a call for
enough increase in ethanol production to reduce daily oil imports by
1.5 million barrels by 2017. As the ethanol production increased
refineries couldn’t keep up the demand and had to import more oil. This
added to the increase in price.
Unfortunately, the rise in prices may not be over. Several
things could happen to keep driving up the price of gasoline:
continuing tensions over Iran’s nuclear talks, worse conditions in
Nigeria or another active and devastating hurricane season [Source: The Washington Times].
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FFi a one in 1,000 opportunity.
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Fuel Freedom International in the St Petersburg Times
December 8, 2007
Source: St. Petersburg Times
The pitch: Pop a pill in the fuel tank and save money.With gas prices creeping back up and everyone is trying to find an agreement, thousands are searching for answers to all the woes of fuel in a pill.
They ‘re called Miles Per Gallon Caplets or MPG Caps, produced by the company Altamonte Springs Fuel Freedom International, which has just completed its annual conference Sunday in Orlando. The caplet supposedly increases of a vehicle ‘energy efficiency while reducing emissions.
Florida Attorney General Bill McCollum survey on the freedom of fuel in response to dozens of complaints his office has received around the state, the nation and the world.”
Randy Ray, president of Fuel Freedom, said in a statement: “FFI has been working with the Florida Attorney General to ensure they have all the information they need. We applaud the AG’s desire to protect consumers and are confident that they, like our hundreds of thousands of satisfied customers around the world, will see the value of using MPG-CAPS to lower emissions and save fuel.”
Through public relations firm Levic Communications, a Washington, D.C., company that specializes in managing crises in the media, Fuel Freedom says all Better Business Bureau complaints have been resolved. The company promises a 100 percent guarantee of its product or it will refund the consumer’s money. In addition, the company says tests of the product have proved its claims…
Go to our reports section to read reports made by major companies from all over the world
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Carbon Calculator
December 6, 2007
[iframe]ffisuccess.com/wordpress/carbon.html[/iframe]
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FFi a one in 1,000 opportunity.
December 5, 2007
“Oil prices are breaking records every week. Gas is on its way to all time highs with no ceiling in sight.”
The world responds to MLM when the economy is on a down turn and with oil prices nearing $100 U.S. a barrel, a ripple effect though the economy is going to make everything more expensive and people will be looking for ways to add to their income like never before.
People are landing HUGE commercial sales. Gail Boone in Canada just signed a contract with a company for $450,000 worth of MPG Boost A MONTH!!!!!!! That is $30,000 a month to her and she has five more sales in the works.
FFi is a one in 1,000 opportunity!!
While no Network Marketing Company is perfect, the odds of a company less than two years old making it five years is 1 in 1,000 statistically and historically. Why would you want to hurt your reputation and friendships on a 1 in 1,000 chance?
FFi is poised for yet another run. Not just because of fuel costs, but also because of some of the key things they are putting into place at a corporate level. New tools, new incentives, new packages, new products increased infrastructure and more.
Listed under Tags: FFI|fuel|gas|MLM|MPGStay tuned to this site, so we can keep you updated on our next growth spurt, which is proof of what is about to come. Don’t miss it.
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How Fuel Freedom International MPG Cap Works Part 2 of 4
December 5, 2007
Part 2
Jack Cracklauer, chemical engineer, presents how the Fuel Freedom International MPG Cap and MPG Boost work in gasoline and diesel engines … alle » to increase miles per gallon. Jack has spent over 37 years analyzing, researching, and testing the ingredients that make up the MPG Cap product. He explains in detail what these products are and exactly how they work. Gas Savings Product, Diesel Savings Product, Gas Pill, Fuel Savings
Video is on read more
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How Fuel Freedom International MPG Cap Works Part 3 and 4
December 5, 2007
Check out This video to understand how it works!!
Jack Cracklauer, chemical engineer, presents how the Fuel Freedom International MPG Cap and MPG Boost work in gasoline and diesel engines … alle » to increase miles per gallon. Jack has spent over 37 years analyzing, researching, and testing the ingredients that make up the MPG Cap product. He explains in detail what these products are and exactly how they work. Gas Savings Product, Diesel Savings Product, Gas Pill, Fuel Savings
Video is on read more
Part 3
Part 4
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