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Friday, September 2, 2011

Retail Oil

We're getting close on the Chrysler Sebring project. Today I went to the auto parts store to pick up an oil filter. It's going to be easier to install now than after we get the engine in. While I am there I decide I may as well get some oil and anti-freeze. We will need them before we start the engine, and that is liable to happen any day now, and I am not going to want to make a special trip just for those items. I am probably going to need to make a trip to the store for something, but who knows? Maybe not. Like I said, we are getting close.

Going into the store (O'Reilly Auto Parts) I see a poster advertising Castrol motor oil and Fram Filters, I think big whoop, they probably still cost double what the generics do. Then I get inside and I find that the generic oil is $4 (FOUR DOLLARS!) a quart. They have five quart jugs which are handy, but there is no discount for buying the economy size.

I pick up a Fram filter because it's easy, they have one of those little electronic selection jobbies. They have some other brands, but nothing that looks like the discount generic, so the $4 Fram filter is fine.

I get to  the checkout counter and guy tells me I can save $4 (FOUR DOLLARS!) by getting the Castrol oil instead of O'Rilley's house brand. The Castrol five quart jug is normally $24, so they are knocking off $8. Castrol must really want to sell some oil.

Yesterday I drove by one of those quickie oil change places and they were advertising oil changes for $18. Times must be tough. They must be counting on selling you some windshield wipers.

I think oil is somewhere North of $50 a barrel these days, but less than a hundred. A barrel holds something like 40 gallons, so if you buy it in bulk, a gallon costs about $2. Then you get to refine it, filter it, add a teaspoon of magic goo, and then bottle it. By this time it's now about $1 a quart, or $4 a gallon, same as gasoline. But for every gallon of motor oil they sell, the oil companies sell like 300* gallons of gasoline. So multiply by a factor of 4** to compensate for the smaller volume and you get $4 a quart, or $16 a gallon. Huh. Imagine that.

* 6,000 miles (distance between oil changes, which takes about a gallon of oil) divided by 20 miles per gallon for gasoline.
** Double the price for each factor of ten in difference in volume. A rule of thumb that I just made up.

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