Special Report: Misconceptions at the pump

MIDLAND-ODESSA, TX (KWES) - Sites like Gas Buddy say the average price of gas in Midland/Odessa is around $2.50, Austin $2.28, Houston $2.25, and San Antonio $2.21. With so many oil and gas companies in our area you might think they love these high prices. It's another number they are more worried about

"There are a lot of components that go into that price of gasoline," said Steven Pruett, President, CEO, Elevation Resources.

Gas prices, we love them when they are cheap. If we're comparing, $20 in the Midland/Odessa area can get you eight gallons of gas. In Houston, $18 can get you the same amount. It's an average of $14 more a week out here. Good thing oil and gas companies don't stress on the price of gas to pay their bills.

Their money maker lies in the price of crude oil.

One of those producers, Steven Pruett says he and others will take crude oil at or near $60 per barrel any day of the week.

"Yes do I wish our consumer pay $2.30 like Big Spring, sure, I think even at this level we're seeing consumers even at this level not only at Midland and Odessa but across the nation buying more SUV's and pickups and they are less concerned about conserving and getting higher fuel economy from their cars," said Pruett.

So, what goes into the price of gas, gas prices are made up of oil price, the refinery price for making the crude, distributing costs, and taxes to the state and federal government.

"What determines what we can invest is what we get paid for our crude oil and our natural gas and we re-invest that back into the ground," said Pruett.

Still with me, remember when I said crude oil are what most companies pay attention to, those prices are traded on the NYMEX. Think of it as the New York Stock Exchange for oil and gas. Crude oil prices are set there.

Those prices have seen its ups and downs in the last few years.

"It's the commodity roller coaster as I call it's dysfunctional and its unpleasant for oil and gas companies. It's unpleasant for consumers as well," said Pruett.

Pruett added the difference in gas prices can be traced back to refineries. Big Spring's gas is almost 12 cents cheaper because of the Alon refinery. Other refineries as you get further south, also have a hand in prices.

2.6 million barrels per day are being produced in the Permian Basin with an expected 3 million by the end of the year. Some say production might be overdone, but companies are looking at other factors going into the future.

"I am concerned about enough truck drivers to haul my crude to a terminal, whether there's enough pipelines to take that crude to market and whether there's enough refining, or export capacity so there isn't a situation that no one wants to buy my crude which has happened in the past," said Pruett.

Focus is on the present and even though it might seem a little expensive, companies believe prices are in a good place.

"Where we are now is a healthy equilibrium where oil companies like mine and larger companies like Pioneer can make money at $60 per barrel and continue to reinvest and adding more and more crude oil to the market place," said Pruett

We don't like gas prices when they are expensive, just keep in mind oil and gas companies aren't the ones to blame.

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