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Why is oil so expensive?

Updated: 8/16/2019
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12y ago

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The basic answer would be the sheer amount of enery that needs to be used to extract oil (it's getting harder and harder as deposits decrease) as well as the global supply and demand that pushes the price up further. Couple in stringent environmental regulations in much (but not all) of the world, the cost of producing a barrel of oil again increases.

Given the lowest paid man on a north American rig is the floorhand, and he nets usually between 6-12 K (this is Canadian dollars) a month for the hours and work, that adds a significant cost as well the the extraction process just to keep the wells pumping. Add in the cost of drilling the hole (they make as much or more than the service personnel).

Then there is transportation. Depending on where you are this might require a tank truck, rail line or other heavy transport method to move the oil to the refinery if it is not cost effective to pay for pipeline infrastructure, which in itself can cost millions or billions.

So not it's at the refinery... so the process starts all over proccessing the crude to usable oil products. I'm not really familiar with any of the refining, but i'd imagine that would have a lot to do with the cost of finished oil products such as gas and diesel to the public.

I'm no expert, just a rig worker in Northern Canada, that's just what I see from my end on the lease servicing the wells.

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