Where I live gasolne is about $1.07/gallon. Take away the 40 cents built in tax, and the product price is about $0.67/gallon. Motor oil, OTOH, is about $1.00/quart or $4.00/gallon. I have always understood that it requires more refining to get gasoline from crude oil than it does for motor oil. If this is true, why is the less refined product 6 times more expensive?
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Motor oil has to be refined as well. This is why the nice gents at the gas station always ask me what kind I want. “10/40 or 20/50?” Naturally, I have no idea what they’re talking about, except that they are different petroleum fractions, separated by refinement.
As to why gasoline refining leaves it so much cheaper than refined motor oil, I have only guess:
(1) Demand for gas is higher. Everybody needs both, but you don’t buy oil in the same quantities. So, the process for gasoline refinement have a cheaper unit cost (bigger facilities, cheaper additives, etc.)
(2) Maybe there is just more of the stuff that goes into gasoline than the stuff that goes into lube oil. Gasoline comes from the “middleweight” range of crude oil (septane, nonane, etc.); viscous oils come from the “heavyweight” end (dodecane?), where concievable there could be less around.
(3) There is some sinister cartel raising lube oil prices to what the market will bear. This isn’t happening nearly as much with gasoline, because we buy so much more we just couldn’t afford the cartel prices. This theory is pretty bogus, since in Europe they manage to afford gasoline prices several times what it costs in the U.S.
Disclaimer: I do not work in the petroleum industry, so these are my guesses.
However…
Volume is one thing. In a year I probably use 750 gallons of gasoline and maybe 5 gallons of motor oil.
There’s also less packaging involved with gasoline; this might be a factor.
There’s more competition too. Gas stations put their prices up on big signs (at least they usually do here) out front; as you drive past you can SEE whether the station across the street has lower prices or not; if one of them is a nickel less, you’ll probably pull in there. However, most people don’t bother to go to several places checking the prices of motor oil.
It also strikes me that there may be extra “middlemen” in the motor oil chain… at least on paper: ARCO gets crude oil and turns it into fractions. They sell the gasoline fraction more or less directly at their service stations, but the heavy fractions they sell to (say) Quaker State, who turns it into motor oil, and sells it to a retailer who sells it to you.
Boris beat me to it, and raised an interesting point:
I’m pretty sure this is NOT true in crude oil as it comes out of the ground; there’s not enough of the gasoline fraction in crude to meet demand (or, to put it another way, meeting gasoline demand would take a lot more crude oil than we’re currently pumping out of the ground).
One way that the demand for gasoline is met without producing way more other stuff than is needed is to “crack” the heavier fractions into gasoline catalytically.
Now, it may be that the ideal molecules for cracking into gasoline are also the ideal molecules for use in motor oil. If so, this would increase the gasoline fraction at the expense of the motor oil fraction.
torq
Interesting. I remember learning about cracking once in an o-chem class, and then I forgot about it. Thanks for refreshing my memory.
Motor oil, at least these days, is more complicated. At the high end, you have Mobil 1, which is entirely synthetic (it’s ultimately made from raw petroluem, of course, but it goes through the same kind of chemical processing that turns petroleum into plastic, except that in the case of Mobil 1, it’s motor oil instead of plastic that comes out.) But even at the low end, you have to be more careful about impurities, while the greater viscosity makes it harder to filter.
Plus there are the various market factors mentioned above.
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– Charles Williams
The cost of addatives is probably a factor,too.
Detergents, anti-foam agents and so on.
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