Oil and Gas Industry Value Chains


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

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Natural Gas Value Chain


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

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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%

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