Seasonal And Regional Production And Markets
Keep in mind that because of many variables, including different taxes levied, seasonal changes and different blends required in the refining process, the cost of obtaining a gallon of gasoline for the Virginia market will be less than for a gallon of gasoline sold at the pump in California. In California, where much of its oil comes from refineries within the state, special laws call for specific requirements for lead content and other additives as well as unique gasoline formulations to prevent smog and other environmental considerations.
These extra requirements relate to higher refining costs that will be passed along in the 
higher pump prices. Also, since the quality of all crude oil varies widely, it should be noted that the level or ease (and cost) of refining depends a great deal on the quality of the crude. For instance, premium crude oil from Texas, called West Texas Intermediate has the most desirable characteristics for producing the lighter products like gasoline while premium crude from Nigeria is easier to refine for middle distillates like home heating oil and jet fuel. In direct contrast, the refining of Saudi Arabian Light will yield about 50 percent heavy residual crude that must go through the more costly additional processing.
The Gulf Coast is the leader in oil refinery capacity in the U.S. and has the greatest concentration of state-of-the-art facilities in the world capable of refining the heavier residual crude. This region supplies refined products to both the East Coast (more than half of the gasoline, heating oil, diesel, and jet fuel) and to the Midwest (more than 20 percent). As stated earlier, California operates its own reformulated gasoline program.
Developed Nations Thirst For Oil
As we all know, the developed industrialized countries consume more crude oil than any of the others with the United States (21 million barrels per day) firmly fixed at the top of oil consuming nations behind China (7.3 million), Japan (5.2 million), Russia (3.1 million) , and Germany (2.6 million).
To process our oil, the D.O.E. reported that as of April 1, 2008, the number of operable refineries in the U.S. was 150 with 4 presently idle with an operating capacity of around 17,594,000 barrels per day. The gasoline yield from these refineries was reported to be 42.3 percent, while a yield of 27.6 percent was for home heating/diesel fuel, and 9.5 percent for kerosene-based jet fuel.
Five Largest Oil Refiners
The five largest oil refiners in the U.S. today are ExxonMobil, ChevronTexaco, BP, Shell, and ConocoPhillips. Ten years ago these five companies controlled only 34.5 percent of oil refinery capacity. Since then, however, as a result of government-approved mergers they now control some 56 percent of the refinery capacity. Some believe these mergers were designed for self-serving purposes. One, to maximize profits by eliminating independent refineries so as to tighten refinery capacity and two, because of their strong market position, to manipulate gasoline supplies by intentionally withholding supplies or by placing refineries offline because of some “mechanical glitch”.
Oil executives, however, say they have no incentive to withhold supplies by going offline because that forces them to buy extra gasoline on the wholesale market, or spot market to fill customer orders while at the same time having to continue paying their workers and extra maintenance personnel. In fact, to make up for the limited number of refineries oil companies have spent millions to upgrade the production capabilities of many of their facilities in order to provide them with the capability to refine the heavier residual crude.
