“OPEC likes to point out that from 2002-2006 the G-7 countries earned $460bn from tax on oil while OPEC countries earned $410bn from selling oil”.

Taxing oil is not “earnings”! If you give your Grandma $200 to buy a winter coat for instance, you are just moving money around. No one is “earning” anything.

And if you are lucky enough to own land with oil beneath it, and some one PAYS you to allow them to invest millions of dollars to extract it - whilst you do nothing. Then that’s not “earning” either - it’s just fantastically good luck!

But if you are acquiring something at one price, and selling it at a higher price (and injecting value in the process through your knowledge and hard work) - then you are indeed “earning”.

Gas is so expensive. It just seems so unfair and companies will try to come up with explanations and they just don’t make sense. I think that some of the time they just come up with excuses. Also how do you know for sure that they don’t just make the figures up? There seems so much conflict over the prices and what the companies lead people to believe. Who do we believe? In today’s world that is very difficult to know. Thanks for this information.

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http://www.freewebs.com/tippits
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This article is kust BEGGING for a chart showing the cutup of that gallon. But it does enough to show that the “villains” making the real money are not the countries owning the oil but our governments and oil companies.

Want to know where the money goes?
Check out how much the CEOs receive in bonuses. Many have bonuses exceeding 20 million.
Also, these oil companies only invest 21 million a year in alternative fuel research!! Uncle Sam needs to step in and stop the price gouging. It’s spinning out of control in this oligarchy.

Please stop whining about “high fuel prices”. Four dollars a gallon? Try ten dollars a gallon, as is the case in Europe.

Don’t know why you complain about the cost of gas in the USA. We pay 1.30 a litre and you pay $1.00 a litre and we make it here in Edmonton, AB and what makes us mad it is cheaper and always has been in California.

As suspected, the futures markets are the source of our problem. I believe that a temporary solution is to force the investor/speculators to panic and cover their positions by the U.S. government creating a surplus of oil by taking out abnormal amounts from the strategic reserve, and putting it on the market. This will cause the price of oil to drop significantly in the short run.

When the players start to run, and cover their positions, oil will drop for awhile and give the country some breathing room. Meanwhile the government can replenish their stock at reduced prices!

Isnt it strange that in just one year the oil prices jumps from 70$ a barrel to 135$ a barrel.

I simply dont agree that the requirement has doubled in just one year, which can cause prices to double.

Today such high crude oil prices are having spiraling impact on all facets of our lives.

For example, If anyone digs deep in the World food crisis, one can see that due to higher transportation costs, which is driven due to crude oil prices, the food transporation has become less reumerative, which is resulting in exporters building the freight cost into their prices.
While climate change has it’s own role in this problem, but in the past also we have seen times when one country has faced draught and others have helped her.

Therefore, act of increasing the oil prices for the profitability of shareholders of oil companies around the world is a “crime against humanity”.

Very well said, Peter Spencer.

It is true that both the OPEC governments and our own governments do not earn the money they get from oil. They take it from those who work, because they have grand schemes to fund.

Like, for example, buying military equipment and sending other peoples sons to go blow themselves to pieces for the glory of the nation state.

It is a merry world when those who govern amuse themselves in this way with our money, and our work.

Oil is a property of our planet, property of all. No country and individual has the right to dictate. It is the oil of the fossil of the ancient trees growing at a time before the human being came to exist.
Super powers with UN must use all means to control the oil price, all producers must work under the standard price of UN, stop floating it, it is killing the growth of many nations like mine.

Seng
Laos

Its only going to get worse.
Oil is getting harder to get and more costly to bring up.
Geverment all over have fallen in love with the earning from oil and fuel. More and more cars are built and more and more factories and ships. This is the beging of the end. Most Opec countries are running low on supplies and only have another 1 or two generation of oil left.
The world has to change .The good old days are now. When do you sell your car ? Maybe when fuel hits $400 a barrel . I think its time to get some riding lessons and buy an Ex race horse. Even your motercycle will cost too much to run, Solar Harley Davisons maybe ??

I think Mr. Spencer is right.

And I add:
We should not get worried about the profits of the oil companies. We should be worried on how the consumer help them to transform their business as fast as possible into environmentally friendly.

That stuff of how much money they get is, in my opinion, a distraction.

The right questions for oil companies are:

1. How are they planning to transform their business?
2. Which is the time line to implement the changes?
3. Which are the current results of their investments?
4. How are they helping in awareness campaigns to the different countries? Which is their contribution?

The market should define at the end which is the oil company that is honest with the public. Which one is the real leader?

The governments in USA has to pay for the maintence and construction of roads. This is not fully covered in the low US gas tax.

Therefore the US goverment does not get any netto share of the high gas price.

OPEC can put their par of the gas price directly in the bank.

There’s a huge difference these days between the real global economy and a parallel “virtual” global economy.

In the virtual economy, virtual assets (derivatives, leveraged financial products, futures in commodity markets) are created which often rise sharply in price and smart operators who cash in in time can pocket huge profits. But people who don’t get out of a virtual market in time and who may be STILL buying or STILL holding virtual “assets” are left holding often worthless paper.

Now for some oil statistics
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The figures for oil demand worldwide per day for 1st qtr 2006 and 1st qtr 2008 are 85,4 M barrels and 86,6 M barrels.
Source: IEA

But - “speculative trading in oil” has increased greatly.
In 1997, the volume of oil future contracts was 4 times the global
physical demand. In 2002, it was 6 times higher. In 2007 future contracts were 16 times higher , and so far in 2008, 17 times higher.
Source: Chevron Corporation

sounds like a monoply to ripp us off

sounds like a ripp off to me

OPEC is fixing the price of oil by ensuring that cartel members do not produce enough.
If drug compnaies conspired to do the same thing their management would be in jail!!!
OPEC members are guilt of crimes against humanity and should be prosecuted in the Hague - high oil prices mean 3rd world countries cannot afford to run farm implements, medicines can’t be transported and much needed food aid rots in harbours.
The UN should audit OPEC and enforce REASONABLE profits.
Building ski runs in the desert, ugly skyscrapers, huge shopping centres, buying up half of London and having your own private Jumbo Jets is an OBSCENE demonstration of this greed.
OPEC’s greed is killing millions!!!!

It sounds to me, that the only groups actually “earning” money from the process are the oil companies. The royalty owners (pick your group - soverign country like Saudia Arabia, land owners in the US, or the US Government in the offshore US) don’t earn it. It’s FREE money to these groups. They only cash the checks and spend the money. Not a big deal. So, who actually ADDS value to the process? Sounds like Big Oil/Pipeline transportation/refining/ tankers and the retail dealers are adding all the value and rest are just sucking $$ from the process…even the speculators aren’t adding value to anything here.

I know a bit about this. I’m a very small royalty owner in Texas…now THAT IS free money. I just take the deposit $$. Oh, I spent 20 years working for Big Oil and know the $$, time and major expertise it takes to find, produce, manufacturer, transport and market gas, oil and distillates. If I gave you a barrel of crude, could YOU make Unleaded premium gas or diesel from it? I seriously doubt it, with harming either yourself or the environment. Give Big Oil a break. They ARE earning it.

What’s with the living in denial business. We should welcome high oil prices. It is the only real solution to our addiction. It won’t take long for the country to learn to live with four cylinder cars. In fact, why not raise the tax on a gallon of gas and subsidize the trucking industry in order
to keep the price of retail goods stable.

Whatsover the price of a commodity is, if it reflects not the true human resources & energy gone into it, only means disaster in the days to come. For there is a “fine balance” to be maintained which equals the money in circulation and human resources & energy in the world in circulation.
The World needs a monetary order based on this fine balance and the first law of thermodynamics.
Carl.

The handwriting was on the wall in 1973 (35 years ago!) but we ignored all the warnings at a time when we could have worked out solutions to the problem. In the meantime, American consumers HAD to have their SUVs and other gas-guzzling , status symbol cars. The major American auto makers fed into this and gave them what they wanted. (Yes, I know about supply & demand!) Now the auto makers are on a downward slide. Probably not all three will survive the fallout. Now we are ALL paying the price for a combination of stubbornness, pride and, most of all, GREED. We have become our worst enemy.
Another part of the problem is our consistent failure to do all that we can (including arm twisting) to try to bring peace to the Middle East.
Oil and Israel are responsible for our intervention in this area of the world. The Arab oil producing countries are blackmailing us because of what Israel continues to do to the Palestinians. The U.S. is still hampered by the post-WW II national guilt about not responding quicker to the “Holocaust. “And it goes on and on and on and on!

Do you know the actual cost (to Pemex) of one barrel of oil?, you mention where money from oil goes in a lot of places but no mention about Mexico

wrong! earning is using any assets to make money.

if you own a house and someone lives in it and pays you rent, you have employed that asset to earn money for you.

If you are lucky enough to have oil under your feet and allow someone to drill for it for a fee, you have employed your asset to earn money.

If you are a government and employ a tax on goods or services you have exercised and employed the asset of your authority to earn money.

I live in the north of Scotland, I can see the oil wells in the north sea from the house. I am paying £1.29p for diesel, roll on Independence..

Hear hear

This is an interesting story, but it fails to ask the bigger question: Why is the futures price of oil so high? One could say this is because of unrest in the Middle East and growth in China or India–but none of these things is new.

Also, the article fails to note that the biggest issues for America aren’t related to obtaining oil, but actually refining it. There is spare oil in the system, but it needs to be refined before it is being used. However, a new refinery hasn’t been built in the United States for more than 30 years, due in large part to government policies and environmental activists who seek higher gas prices. If we produce more refineries, we will be able to prepare oil for use more quickly, increase the supply available to consumers, and then prices will start to fall.

Longer term, alternative sources of energy should be considered, but this would fill the gap in the short to medium term.

I,m sorry, but your figures are not correct. Search again in IEA and you will finnd.

First of all: Thank you very much.

What makes people very frustrated, angry etc. is the fact that they dont undertstand. They dont undertstand politics, business, science and for the average human being not understanding or knowing what something is about is truly frustrating. As an average person paying US$1.30 per liter is totaly frustrating thinking that the profits only go to one person or otherwise one greedy firm, company. Thank you for ‘breaking it down’ to make us understand why.

Regard’s:

Shawn Majiedt

This just shows that tax is too high.

Those who want to see “expensive” energy, because they think it is a solution for something, should be very careful what they wish for. The easiest definition of a “rich” nation is a nation with “cheap” energy. If you want to live in a poor nation, then move to one. Environmentalist wants to see $7+ gas, but they truly have no idea what they are saying. It is not as simple as driving smaller cars! Try heating a home in Minnesota, at $10,000 per year! How about the cost of flying or manufacturing many products?
The bigger problem is that for every $1 that an American spends, $.50 + leaves the country. In most cases it goes to a country “who is not our friend”, even when they claim to be. It is “crazy” for Americans to rely on outsiders for our own energy source. Absolutely crazy! One way or another, we have to become 100% self reliant as a nation. It will take the environmentalist and the capitalist to work together. Efficiency is part of the solution but so is expanding our energy sources. You cannot expect one side alone to be the solution.
Mike , Los Angeles

Thanks for the great article Jim. It does help in understanding the profits made from oil. Great replies from readers as well.

One question begs to be answered - suppose there existed a cheap alternative (to say oil), how long would it take for us to end up in a exactly similar situation..?

We humans tend to take energy supplies for granted and are sure guilty of shameless waste. Consider that most plastic products are made (from oil), just to be thrown AWAY.

I drive a 2.8 litre car that consumes 7L/100km @ 120km/h on the highway. This increases to 8L/100km @ 140km/h.

In city traffic the vehicle’s consumption rises by a whopping 43% to 10+ litre/100km at 0-60km/h. Figure that..!

This is because the vehicle’s momemtum is lost when stopping.

What level of engineering is it going to take to decrease a vehicle’s consumption by 43%..? If we improve the transport system(s) everybody gains this 43% - whether the vehicle is well tuned or not..!

Whether we use petroleum, diesel, hydrogen, water, beer, whatever - we will stil waste the 43% due to our stupid transport designs.

We have to become much more efficient using the finite resources of this rather small planet. I’d say now is a great time.

I think the biggest problem here is:
As a driver I’ve seen that most of the time (90%) we drive our cars alone without passengers. And still we have to carry our cars that weight 2000 lbs - 4000 lbs everywhere we go. Of course it will take a lot of energy / fuel to drag a lot of metal from here to there.
The very possible solution is to make cars lighter, smaller and slower cars at least for the cities, after all, most of the cars of the world are in the urban areas.
A small 250cc engine, like the ones used in a motorcycle is enough to carry two people in a “dune buggy” or “golf-cart” style modified car.
We don’t need no more than that except for the freight vehicles.
In this way we’ll reduce our oil consumption to only only aprox. 20% to 10% of fuel of what we use today

Another issue:
Is not because I’m chinese, but I think that blaming China for buying all the oil is a little bit out of proportion. Is true that China is developing itself and consumes more resources than before, but the main reason China is consuming more energy / resources is that a lot of factories from developed countries have moved to China and so have these factories needs. So instead of sending the oil to a factory in California it will be redirected to China.
It’s unreasonable to blame China when most of the companies there were established by foreigners or are outsourcing companies that make products that a common chinese worker doesn’t use or doesn’t even know what it is.

Final opinion:
I support what “Seng” said, oil should be owned by humanity and not by lucky countries. We should compensate these countries but not be their slaves. If we continue this way not only we’ll end up being their slaves but our futures generations also, because our children will end up buying / borrowing all the assets these countries have gathered now.

Unfortunately, i feel you guys are rather lucky compared to myself. I live in the United Kingdom, and if worked out into dollars we are paying very close to $12 for a gallon of fuel, well over double what you pay. nearly $8 is pure fuel duty which goes straight into our Governments pockets. We get taxed on top of tax. Fuel duty is going to rise 4 cents in october and another 4 cents in april, so added onto certain oil price rises we are going to be paying nearly $13 for a gallon soon.

first of all oil is a natural commodity that has been discovered by man
to help man live a better and comfortable life. oil companies have been exploiting this gift from nature to satisfy few peoples greed. please stop using excuses such as advance technology, law of supply and demand, economics etc.etc. nobody has the right to exploit
and abuse our natural resources to benifit and enrich few greedy
maniacs.

How can you say the recent increase in oil prices is based solely on supply and demand? I’m no expert but, the price of a barrel of oil has increased threefold in less than a year. Has demand increased threefold??? I think not. I believe the increase is due to a combination of factors including Government taxes, a modest increase in demand , but primarily by speculators.

I would be more worried in Canada and the US that as we switch from petrol based fuels to more environmentally friendly fuel that the amount of gas tax to fix roads etc is getting smaller. If we were to switch majorily to hybrid, electrical or hydrogen based vehicles the gas tax revenue would be nil or minimal. The government will look at taxing something else to make up for the drop in gas tax revenue… That worries me just as much.

Driving in Europe you will not see any passenger trucks. You see very few SUVs. Most of the large vehicles you see belong to Americans working in Germany. With gas prices between $8 to $12 a gallon, the europeans have learned what Americans are getting ready to learn. Gas guzzling vehicles are going the way of the dinosaur. When you have to make the choice between food and fuel, at $8 a gallon it’s a no brainer.

I often wonder what happened to the USA. It has become worse since the Bush Administration has been in power and it is all because of greed and control. The government is supposed to be for all the people not just the rich and the President Bush’s and VP Cheney’s interests.How much money do people need and why do they not feel guilty for what they are doing? Why does Cheney not feel guilty.?Do they not have a heart? The CEO’s of the oil companies are shameless and they are not interested in America.
God forgive them. To think they go to Church every Sunday and even visit the POPE.

I like it and the background and colors make it easy to read

The site\’\’s very professional! Keep up the good work! Oh yes, one extra comment - maybe you could add more pictures too! So, good luck to your team!

Hello people! Nice site!.

I browse and saw you website and I found it very interesting.Thank you for the good work, greetingsM

You have built a good website

It’s a win , win for the Oil industry … not just at the pumps … but anythng that is manufactured out of plastic or uses oil in it’s product…. and that just about includes everything on the face of the planet ….. So when they talk about the energy crisis and the automobiles .. they should include the vast amounts of plastics that are being made and sold to the consumer … share holders must be very pleased with this …. they are manufacturing an electric car in Quebec the Zenn… when it becomes avaliable in Manitoba I will be buying one …. and not going to the pumps for gas or oil or oil products for it … I don’t drive now .. I cycle… or walk or use public transit … too expensive to operate a vechile now a days … I rather spend my money on myself than continue to put it into a money pit … car and gas

If no one is earning then where does this money go?
I am not saying I know the the fundamentals of economics but why not take the taxes (that our government takes from the oil) and put it into development funds, in order to quit this obscene addiction to oil we have. Its a hideous cycle because no matter what, we need the oil and we will pay whatever the cost. If the government cared about its people, why not put the taxes into things that will make it easier for us people. I know the answer to this question already, but I had to say it.