The Prices of Crude Oil and Automotive Gasoline

I’ve been wrestling with a thought experiment for the last couple of months and I think I’ve finally made some headway in resolving it.

This all started when a barrel of crude oil was hovering around $100 per barrel. Round numbers like that make doing the math on this problem a lot easier. From what I’ve read the best refining processes in the US can yield roughly 22 gallons of automotive gasoline from a barrel of crude oil. The price of oil differs around the globe, but there is generally less than ~$2 per barrel in deviation. So crude oil pumped in West Texas might bring a dollar or two more than it would in the North Sea.

There are numerous costs added into the equation between the time the oil arrives at the refinery and the time we buy the gasoline at filling station. There’s the cost of the refining process, the delivery, the marketing; there are numerous additives blended into the fuel, both to make their emissions less toxic, and to aid in their combustion within the engine. In California and several other states there are summer and winter varieties of fuel which, depending on the mean ambient air temperature, reduce the emissions’ impact on air quality.

The Federal government charges an excise tax on gasoline, as do many state governments. These add up to about $0.36 per gallon in California. There’s another $0.25 per gallon sales tax in California. That adds up to roughly $0.61 in taxes

So getting back to the original formula there are 42 gallons of crude oil in a barrel. At $100 per barrel, that comes out to about $2.38 per gallon for crude. That same barrel of oil will yield about 21.6 gallons of gasoline. So, with oil at $100 a barrel, the cost of just the raw the ingredient of gasoline, crude oil, composes $4.63 of the cost of a gallon of gasoline.

Wait, what?

I’m looking at my commodities ticker right now and it says West Texas crude is going for $117.83. I drove by a gas station this morning and it said $3.84 for 87 regular unleaded, of which I’m paying fifty-five cents in excise taxes. I don’t get it.

Okay, some of those are June calls, the speculation market for what the price will be sixty days from now. Well, assuming it takes the oil two months to get from the ground to the pump, the prices for January and February were $92 and $95 respectively. That would still mean the raw materials cost in gasoline is $4.38.

I found this great page on the California DoE website that breaks down the price of gasoline. Among other things, it states that the constituent price of the oil in one gallon of gasoline for the week of April 21, 2008 is $2.80. It also lists the refinery cost and profit for the same period as $0.28.

So, assuming the refineries are paying $2.80 for the crude oil in a gallon of gasoline, how much does a barrel of that oil cost them?

So, 42 gallons in a barrel at $2.80 per gallon means the barrel of oil costs $117.60.

Wait, what? It looks like the Department of Energy of the State of California is getting this number just by dividing the price of a barrel of oil by 42.

I am so confused.

Exchange ActiveSync for Dummies

Today a vendor asked me a question that I get asked all the time. The question I was asked was, “How is the iPhone incompatible with Exchange Server?”

The simple way of explaining it is this. We have a piece of software from Microsoft called an Exchange Server. The Exchange server is a heavy system that performs messaging and collaboration functionality. It is what Microsoft Outlook is designed to work with best.

First and foremost is the messaging functionality – e-mail for large professional organizations. But of nearly equal importance is the collaboration capability it offers. This includes sharing of Calendar items (appointments), Contacts, and shared resources like conference rooms, laptops and projectors, et cetera. So with this system I can check the availability of all the resources I need for my meeting – the laptop, projector, the conference room – as well as all the people I want to attend the meeting. I can then reserve all these items and send invitations to all these people with a few clicks and the invitees can either accept or decline the invitation to attend, also with just a few clicks.

With a robust IT infrastructure, such as ours, Windows Mobile devices bring all of the collaborative and messaging capabilities of Microsoft Outlook in an Exchange environment into the phone itself. It’s like having Outlook with you at all times, rather than only having access to it when you are at your desk.

Most people who get these devices don’t take advantage of their full functionality because they buy them for personal use and are either unaware of their capabilities or do not have access to kick ass IT staff like me. They configure them to synchronize with their desktop computers directly or potentially with a POP e-mail server. This allows the device to pull e-mail from a mail server on a scheduled basis. But they aren’t taking advantage of nearly any of the potential capabilities.

Many of the mobile devices that wireless carriers use nowadays are designed to work with Exchange Server: Windows Mobile and Windows Mobile Smartphone Edition are both designed by Microsoft to work directly with an Exchange Server. RIM Blackberry devices can sort of work with an Exchange Server, but they need an expensive piece of middleware called Blackberry Enterprise (or BES) to piggyback on the Exchange Server, in order to bring all the functionality of an Exchange environment to a Blackberry device.

In addition to server-based middleware, there are also client middlewares that you install on a desktop. This is another piece of middleware – on the client rather than the server – that runs on your desktop while you have Outlook open and it makes an internet connection to your phone and updates it for you. This is cool, until your office has a blackout while you are out of town for the weekend and your computer becomes inaccessible and while you are waiting for an important e-mail. Oh, and you need to stay logged in. So make sure no one else will need your computer while you are out.

The next generation of the iPhone is supposed to have integrated Exchange Server support built in. This would not necessitate the use of a middleware component, but rather mimic the behavior of a Windows Mobile phone.

As things stand now, most people use their phones to sync up with a POP mail server. This is a big step forward. For a mobile phone to be able to even read the contents of a mail server inbox – but the devices are capable of so much more. Windows Mobile devices can sync up with IMAP mail servers, allowing messages marked read on a client
to be marked read on the server during a synchronization.

The most impressive feature of Exchange Server and its integration with Windows Mobile devices has to be a feature Microsoft calls DirectPush. Its the bread and butter of this system and its a tough sell to lay persons. I will do my best to bridge the gap.

When a new mail message arrives at the mail server it is ready to be read immediately. In a corporate environment, or with web mail where the client is effectively on the server itself, the client software (e.g. Microsoft Outlook) is immediately notified of the arrival of the e-mail and poof it shows up in your inbox. You might even get an AOL-esque “You’ve got mail!” sound coming out of your computer. With mobile devices synchronizing by conventional methods (i.e. on a schedule) you won’t know about the arrival of the new e-mail until your next scheduled sync. Or you can repeatedly do manual syncs until you wear off you thumbprint.

Enter Exchange ActiveSync. Without boring you too much on the history of the nomenclature, the essence of this technology is that when Microsoft released the first service pack for Exchange 2003, they bundled a neat little piece of functionality that would send an “invisible” SMS text message to the client device whenever the mobile device needed to be synchronized with the contents of the server mailbox. In English, you get a new piece of mail and it gets pushed by the server directly to your device instantaneously. It works so fast I often hear my phone give me the “you got mail” sound one or two seconds before my desktop Outlook client knows I’ve got a new e-mail.
The same is true for the other types of content in my Exchange mailbox, the Contacts, Calendar, and Tasks (it’s like a to-do list, but better). Whenever I, or my assistant, make a change to an appointment on my Calendar, the server buzzes the phone and says, “hey, there’s been a change, come check it out.”

And the reverse works to. So if I get a call from a vendor from a number I’ve never seen before I can save it on the phone after I’m done with the call, enter a name for the contact and the phone syncs back up with the server and saves the contact back at the office so when I get back to my desk and I need to find that number through Outlook, it’s all been synched up over-the-air (meaning I don’t need to use any client software with a USB cable or bluetooth) to read the contents of my phone back into my computer and vice versa.

I don’t know about you but I hate typing names into phones using even a the little QWERTY keyboards, let alone a conventional 12 button keypad. So when I need to clean up my the address book on my phone, all I have to do is open Outlook and do it all in there. No manual sync – the changes are replicated to the device for me.

IMHO, this is one of the best technologies to come out of Redmond in the last five years. I can’t live without it. I’m even thinking of getting my own personal hosted Exchange service so I can keep my work and personal mailboxes separate.

But what’s the fun of that?