How much does a barrel of crude oil actually cost?

Question

i'm not talking about the final price that we ultimately pay for it? it is my understanding that crude oil is a commodity sold and resold several times over on the world market, before it ever makes its way to american refineries. it isn't until it has made it's way to america that we figure the cost per barrel is the price that is often cited in the news. my question is, what is the actual cost of crude oil minus the markups of all the middle men. in other words, what is the price the first person/corporation pays to the original supplier, i.e. the uae, for a barrel of crude oil? i was told it is actually much cheaper than we're being led to believe. i just wanted to know if this is true.

Answer 1

$200/barrel, it has to go much higher. US wastes the most natural resources in the world

Answer 2

Production costs depend on specific oilfield, some are much cheaper than others.

Also, US does not buy any oil from Arabs, it all comes from Canada and Venezuela.

Finally, there are transportation costs that add to cost as you bring the oil to US. Tanker ships use a lot of fuel to travel, and loading them is a complicated process. Pipelines are very expensive to build and require electricity to run the pumps.

Answer 3

Well, the question should be what is the marginal cost of the next barrel of crude, not the last one removed.  The costs range from $19 per barrel to $60 per barrel, but you have to remember that the $60 barrel fields were not operative when oil was $40 per barrel or even $60.  When oil costs $60 and it was believed it would persist, then they started looking for $60 oil fields.  They are now looking for $100 oil fields. When they find them and the oil comes online the price will fall.  What they try to do is find the point where the cost of the next barrel equals the price people will pay after that supply has been added.

They try to estimate a what-if scenario.  If I add 1 barrel of oil from a new field, what will the price fall to?  Is there a field where I can produce it at that level or cheaper?  If cheaper, what is the price if I add 2 barrels and can I find fields that will support two barrels at or below that price and so forth until they add X barrels and reduce price N dollars so they break even.  They make a profit on every barrel up to the X barrel and break even there.  That barrel is worth exactly to them what it is worth to you.  That is the profit maximizing point.  They make smaller and smaller profits up to barrel X where they make nothing.

You cannot do a simple markup, it doesn't work that way, they look for increasingly expensive fields as they use up the cheap ones, kind of like picking apples, it is easiest to pick the bottom one first and expensive to go buy a series of ladders to get higher and higher into the tree.  If you can raise the price to the point you can justify the longest ladder, then you do it, but that means you make a huge profit on the bottom apples.

Answer 4

Go to the EIA report for true prices.

Answer 5

$147 US Crude