Friday, November 16, 2007

Oil Prices (vs Red Bull Prices)

Shai Agassi on Oil Prices: "The cost of the average used car in Europe is now cheaper than the cost of gasoline to drive it for a year– talk about razor and blades businesses. Big oil still can’t supply the global demand for this concentrated energy liquid, yet the US prices gasoline less than its other concentrated energy liquid – Red Bull – when we compare on a gallon-to-gallon basis. [If you are like me you now wandered into the 'how much is a gallon of Red-Bull' part of your brain...at $2 for a can of 8.3 ounces it costs $30 for a gallon...if you buy it at a club for $6 a can you are looking roughly at $100 a gallon - or 30x more than Gasoline...but then again, where do you find a gasoline that would give you the buzz-worth 15 cans of Red Bull?]"

3 comments:

Hardy said...

This type of comparison annoys me. I heard another a while back about Starbuck's coffee vs. oil, the point being "oil is still really cheap." These comparisons ignore the fact that you don't need to buy 15 or 20 gallons of Red Bull or Starbuck every week. Also, Red Bull and Starbuck's are much more discretionary than fuel. The economic impact of oil prices rising or falling is certainly much greater than that of Red Bull or Starbuck's.

Howard said...

For me the difference is striking because of production costs. I've previously heard it compared to soda. Sugar water costing more than something you drill out of the ground (on the other side of the planet, sometimes from under the ocean), refine and ship.

and I know people who might go through 10 gallons of red bull a week. :)

Hardy said...

It would be really interesting to see what the cost breakdown of Red Bull is: production & transportation, marketing, profit. I'll be the marketing is the biggest. You don't really need to market oil...