USA Petrol Prices !!! We are so Ripped Off!!!

[russellw]

Originally Posted by 2011G6E

Can someone explain why, if the "logic" we have been told for years by the petrol industry is true, we aren't paying around 50 cents a liter...?

Go back and read my earlier post in this thread for an explanation. Like any business there are fixed and variable costs. In this case the fixed costs include:

Tax at roughly 50 cents per litre (the answer to why it isn't 50 cents a litre);
Refining costs at about 8 cents per litre;
Metropolitan transport costs 1.5-2.5 cents per litre (2.5-4.5 cpl rural).

So without anyone actually making a $ the fixed cost amounts to about 60 cpl give or take a bit based on country or city transport costs.

Refinery and retail margins are also fairly fixed. They would both like to make more but they don't and between them these add up to 5.5-6 cents per litre. For this purpose we can consider these fixed costs so the total is now between 65-69 cents per litre.

The one variable is the price of the raw material. I won't repeat the maths here but effectively at the current US$40 bbl price this translates to 40 cpl at the refinery and each US$5 movement (while our dollar is around 70 cents) translates to about 6.5 cpl.

Cheers
Russ