Oil barrel profits after refining

First, I should point out that the petroleum refining industry is

very profitable

Then, let us agree that we can't exactly determine the barrel profit of the refined oil by a direct manner due to many reasons.

Those reasons are:

* The barrel price of crude oil continuously changes.

* The cost of refining processes vary from a refinery to another.

* product specifications has a great effect on the profit.

* other factors such as: marketing ability and the laws of "supply and demand" also vary from place to place and from time to time according to refinery efficiency and capacity.

* Finally, we can't ignore that refinery provides market with many products which may be used directly or used as raw materials for other processes such as petrochemicals industry.

when refining products enter other processes , the profit changes . So, it's a very complicated calculations and there is no base for it.

Here, we are going to simplify the profit calculations considering that we produce only one product : Gasoline

There are three major determinants for Profit:

1- The barrel price of crude oil

2- Costs of production process ( refining )

3- The barrel price of refined product

Generally , the profit equation is :

 Profit 

=

[The barrel price of refined product]

 _

[(The barrel price of crude oil) + (Costs of refining Process )]

** Average costs (The barrel price of crude oil)+(Costs of refining Process ) 

divided into four parts:

1- 74% Cost of crude oil barrel

2- 11% taxes

3- 10% Costs of refining Process

4-  5% Distribution and marketing

*Note: The above ** Average costs ratios differ from place to place and from time to time

Now we make a very simple math calculations to get close results for the profit

- Assume that the refining company buy a barrel of crude oil with $ 100.

- Barrel has 42 gallon.

So, Price of a gallon of crude is $ 2.38

Apply the ** Average costs so we get:

1- Taxes: $ 0.35  per gallon

2- Costs of refining Process:  $ 0.32 per gallon

3- Distribution and marketing: $ 0.16 per gallon

With adding the price of gallon of crude $ 2.38, the net costs would be about $ 3.21

Assume that the company managed to sell the gallon of gasoline with $3.79, it will achieve profit of $ 0.58 per gallon gasoline.That means that the profit for each barrel will be $ 24.36

Of course the company produce many prodcuts - not only gasoline- and the profit increases more...

*Note: Estimated profit per gallon of gasoline is between $ 0.3 to $ 0.6

                                        source: 

en.wikipedia.org/wiki/Gasoline_and_diesel_usage_and_pricing