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PO Box 260415
Plano, Texas 75026-0415
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Oil and Gas Value Chains


From Wellhead to Gasoline Pump

Crude Oil Value Chain
Exploration Production Transportation Refining Marketing
Using technology
to find new
oil resources
  Bringing oil to
the surface
using natural
and artificial
methods 
  Moving oil to
refineries and
consumers with
tankers, trucks
and pipelines
  Converting
crude oil into
finished
products
  Distributing
and selling
refined
products

4click on a button to learn more

Natural Gas Value Chain

Exploration Production Processing Transportation Marketing
Using technology
to find new
oil resources
  Bringing gas to
the surface
  Treating gas
to be sent
to markets
  Moving gas
with pipelines
and tankers
  Distributing
and selling
natural gas

4click on a button to learn more


Oil and Gas Value Chain

Oil and Gas Value Chain


Value Chain Economics

The following tables are estimates of the various cost components that make up the pump price of gasoline. The tables are based on a variety of sources and assume a crude oil price of $49/B and an average pump price of $2.00/gallon. The costs are based on data reported in the Oil & Gas Journal and Performance Profiles of Major Energy Producers 2007.

The significant findings are that:

Over 75% of an integrated oil company's net margins are in the upstream.
  Crude oil costs contribute nearly sixty percent to pump prices.
  Severance and gasoline taxes cost consumers nearly 52 cents/gallon or 26% of pump prices.
  Company net margins for refining and marketing are about 20 cents/gallon or 10% of pump price.

Oil and Gas Economics 

Operation Costs Value Gross Margin Net Margin Percent
Exploration 2.97 16.33 16.33 13.36 36%
Production 17.78 49.00 32.67 14.89 41%
Transportation 1.00 51.96 2.96 1.96 5%
Refining 3.70 60.46 8.50 4.80 13%
Distribution 1.90 63.69 3.23 1.33 4%
Marketing 0.80 64.85 1.16 0.36 1%
Pump Taxes 19.15 84.00 0.00 0.00 0%
        36.70 100%

Gasoline Cost Components

Component $/B Cents/Gallon Percent of Pump Price
Crude Oil 49.00 116.67 58%
Operating Costs 4.90 11.67 6%
Taxes 21.65 51.55 26%
Company Net Margins 8.45 20.11 10%
Total 84.00 200.00 100%

Email   Please contact us with your questions and comments on this analysis.


Please see Energy Information Administration's analysis of seven factors that influence oil markets, What Drives Crude Oil Prices?  See Factors that Influence Prices and Energy and Financial Markets Presentation.



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