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Refining Cost

For a very long time, oil products have formed a major part of our daily lives. As the world became industrialized, oil became a major source of energy used to power our industries. The use of oil and it's by products quickly spread from the industries to our homes in the form of gas and even jellies. As a result of its importance tour daily economic activities, it has become a matter of great importance to every one hence the need to know exactly how this precious fossil fuel comes about and the costs involved.

The process through which the oil we get at the pump station covers before it eventually gets to the pump is quite long. From the onset, oil reserves are located deep down in the crust of the earth. It is therefore drilled out of the ground. It comes out in its crude form. From this point, it has to undergo the process of refining to get the oil or petroleum we need. He exact cost of refining may vary from country to country depending on several underlying circumstances. If we were to take the U.S as a case in point for example, the break down would be in the following ratio. From each dollar charged on gasoline, Taxes will account for 11 cents, the distribution and marketing of the product will consume 6 cents out of the dollar. The cost of refining the stuff from its crude state to clean gasoline would take up 10 cents from the dollar. Out of all the expenses involved the greatest amount goes to the extraction or should I say drilling of the crude oil which takes up 73 cents from each dollar.

Although not every country would use the similar breakdown, the process may as well be the same save for a few changes here and there. Among the factors that would influence the differences in these costs are

* The road network connecting the oilfield and the market place where it is needed. This would no doubt impact on the cost of distribution. A good road network would mean less overheads as there would be fewer breakdowns from trucks.

* Method of transport would also affect the cost of the finished product. While other companies may use roads or rail fro transport others may opt for oil pipelines. All of this methods may come at different costs

* Each country has its own taxation ratios on different sectors and taxes will always be passed on to the eventual cost of refining. This may also lead to discrepancies in cost of refining.

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