According to Consumer Watchdog, in the first quarter of 2022, some California refiners earned more than twice as those reported by the same refiners in other regions and as much as five times more than in the first quarter of 2021.
Valero’s first quarter 2022 refining margin for the Western region was $13.97 per barrel, while in the first quarter of 2021 it was more than $9.75 per barrel.
Phillips 66’s Western refining margins were $17.68 per barrel in the first quarter of 2022; however, it was $7 per barrel in its Midwest and Gulf Coast refineries, and $7.49 per barrel in the West in 2021.
PBF’s profits from its LA refinery grew to $32.84 per barrel for the first quarter of 2022. That is double from what it was in the first quarter of 2021, $15.75 per barrel.
Because there are 42 gallons in a barrel of gasoline, this means that PBF made about 78 cents per gallon on the gasoline it sold in Los Angeles from January 1 through March 31st.
That compares to 37 cents per gallon profits in LA in Q1 2021and 42 cents per gallon profit from its Midwest refinery in the first quarter of 2022.
Business 101: Sale price is set as a function of Cost of Goods (product) + Operating Costs (personnel, equipment, everything down to the electric bill) + Profit Margin (a set percentage, such as 20%)
ReplyDeleteWhen the Cost of Goods increases, and Operating Costs increase, those are numbers. ($100). If a company wants 20% profit margin, they add that percentage to the investment in the product and costs, and sell for the price. ($120)
When the costs increase (it's now $200 for the same unit), the 20% profit margin means the unit sells for $240. The comnpany makes the same percentage, but an uninformed critic will look at that and say "they doubled their profit!!!"
No, they are actually losing money because while their profit margin remains the same, they will end up selling less product and having a higher investment to maintain the same level of business.
And I won't even bother going in to the details or political consequences of the current administration totally hosing the average citizen by not only cancelling pipelines and limiting production, but their move yesterday of changing course to allow oil leases in the PNW and Alaska proves their intention to make us more dependent on Russian and Mid East oil.