What do oil companies actually pay for a barrel of oil?

[rurallib]

I keep hearing the horror of the price of a barrel of oil (over $120 today) and gotta think that oil companies don't pay near that. They must have some kind of long term agreements with producers. Any ideas?

[Skink]

1. Seems to me they own the pumps too so they are buying their own oil.

[RedEarth]

2. Malcolm Berko says oil costs Exxon and Shell about $5,50/barrel... see link to his article

Exxon owns 29 billion barrels of oil, and at $100 per barrel, with an inventory value of $2.9 trillion. That oil cost costs Exxon a measly $5.45 per barrel. Chevron's estimated oil inventory is worth an estimated $2.2 trillion at a cost of $5.34 per barrel and Royal Dutch Shell's inventory is valued at $2.6 trillion billion only cost them $5.77 a barrel. And those are trillions with a capital T. Those companies have a profit of over $95 a barrel and they'll fight to maintain that margin and the favorable tax treatments on their enormous profit per barrel.

http://www.suburbanchicagonews.com/heraldnews/business/berko/889079,4_3_JO11_BERKO_S1.article

[rurallib]

3. Jesus h. Kayrist that's some fine profit margin.

[Xithras]

6. Low numbers like that usually only include pumping costs.

My number in the post below, while higher, was supposed to include the costs of shipping it to the destination and doing whatever else they need to do to make it production ready.

[Xithras]

4. It costs $27 to pump a ship a barrel of Saudi crude to the U.S.

They were discussing this on the radio this morning. There's an additional premium to refine that crude into fuel oil or gasoline, but production costs are well under $35 a barrel no matter what you're doing with it. Everything else is profit for someone.

As for domestic oil, they said it cost about $30 to pump and ship a barrel of domestic oil. We're a bit more expensive (especially when shipping costs are factored out), but competitive.

[zorahopkins]

5. I Heard That It Was About $6.00

I heard that Big Oil -- Exxon/Mobil, Texaco, Shell, etc. -- pay about $6.00 for a barrel of oil.

[Iwasthere]

7. Wish the press would start doing their fucking job

Record fucking profits every year and yet we are in a gas catastrophe....

[zorahopkins]

11. Damn Right!!

The Very Rich keep getting richer and richer -- and buying HUGE energy-wasting houses.

While the poor keep getting poorer -- and homelessness among the poor increases!

It makes my BLOOD BOIL!

[Turbineguy]

8. They have production sharing agreements

with governments as well. Anywhere from 30 to 70% goes to the host goverment.

That's why Middle Eastern countries have so much money. It's why the Sultan of Brunei is loaded.

And if oil company margins were the same as DVD movie margins you'd be paying about $12 per gallon.

[sushi]

9. What happens to the price

if OPEC decides to switch from US$ to Euro?

[hack89]

10. Doesn't the ultimate buyer set the price?

I thought oil was purchased in a auction/bidding process. Perhaps I just don't understand how oil is purchased on the international market - can anyone here lend a hand?

[rurallib]

12. Said another way - who is paying $120/barrel?

[mainegreen]

13. Which oil barrel?

Where's it pumped? How much infrastructure is required to pump that particular barrel? How much does 'security' cost?
How far is it shipped? What grade is it? How much did it cost to find and map that field? How much does it cost to get that barrel out of the source country (if that is the case)?

There is no one answer, that's the answer.

( I presume when you say oil company you are referring to the company that extracted the oil )