When there is one of the largest deposits of oil in the world here. Why do we pay so much for gasoline?

Question

I know that in other countries that produce oil it is sold in those countries much cheaper than outside these countries

Answer 1

Yes, we have one of the largest deposits of oil in the world, and it could get even larger. However, in this country it is owned by a company, whereas in other countries, it is owned by the state. The company sells it to make a profit, not necessarily cheaper to its own citizens to be nice. The state doesn't necessarily look to make huge profits from its citizens, since it makes its money by selling to outside countries. Thus, we pay more for the oil than do the individuals in the other countries.

Answer 2

I'm not sure what you mean by "largest deposits of oil in the world here". First, I assume that by "here" you mean the US. Second, the US does not have significant active fields that could be considered the "largest".

The title of largest known oil field in the world is held jointly by the Orinoco Oil Shale deposits in Venezuela and the Athabasca Oil Sands deposits in Canada. These are both rated at approximately 1.7 trillion bbl. The Green Canyon Formation Oil Shale deposits in the US hold about 800 billion bbl at current estimates. All of these are non-conventional sources and require significant sustained prices to be economical which may happen in the future.

The US has some prospects in the deepwater Gulf but these are still under development and we won't know much more until about 2009 when more ultra-deep water rigs come online.

For now, the US proven reserves from conventional sources stands at approximately 25 billion bbl. This figure does not include some likely future deepwater discoveries in the US Gulf but is reasonable as a baseline. Not that this is small even when compared to the single Ghawar field in Saudi Arabia which stands at between 75-80 billion bbl.

For now, the US must import most of its oil from other sources.

None of this directly addresses the question of "high" gasoline prices, however (although a lot of politicians would have you believe it does). The fundamental reasons the US has higher gasoline prices than the countries where this oil is extracted are simple: transportation costs and taxes.

In order to use the oil from these sources, we have to bring it to the US and then refine it. Pipelines and shipping cost money. Furthermore, refinery capacity is tight right now, increasing the costs associated with this part of the process.

Taxes are also significant in the US, though not nearly as much as in many other countries. Currently, taxes vary from state to state but range from about 10 cents to about 33 cents per gallon of gasoline. Compare that with the UK where taxes are between 25-55 pence per litre.


Hope this helps.

Answer 3

That Big Brother might get even bigger.