Over a Barrel: The Truth About Oil

PHOTO: Charles Gibson with a special report on the oil industry.

Americans are used to hearing about their oil addiction. The case is usually made with numbers. The 400 million gallons of gasoline consumed each day. The 13 million barrels of oil imported every 24 hours. The fact that, with 4 percent of the world's population, they consume a quarter of its oil.

Apart from the statistics, however, Americans' understanding of their oil addiction is woefully incomplete. Many people know what a gallon of gasoline costs, but what about where the gasoline comes from? Or why the price goes up or down? Or the role refineries play? Or what difference the wars in Iraq have made?

VIDEO: ABC News visits offshore rig
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To answer basic yet elusive questions about Americans' relationship with oil, ABC News' Charles Gibson traveled across the country recently, observing several key links in the production chain. Gibson visited Cushing, Okla., where most of the pipelines that crisscross the United States meet. He stopped at a loading rack in Linden, N.J., where truckers fill up with gasoline for distribution to stations across the region. He took a helicopter to a rig in the Gulf of Mexico, where robots extract crude oil buried thousands of feet beneath the ocean floor.

The country's addiction to oil, it turns out, has hidden costs, costs that don't figure into the price at the pump. To get at those costs, Gibson moved along the production pipeline in reverse, starting with gas stations and ending with crude oil at its source.

Oil Addiction: The Loading Rack

Don Paglia runs a Citgo-owned gasoline loading rack in Linden, N.J. The surprising part about his business, he said, is that trucks headed for various gas stations -- Exxon, Conoco, Shell, wherever -- all fill up at the same rack.

"It doesn't really matter," Paglia said. "We will sell it to anyone. ... It is just gas. Gas is the same no matter where you go."

So what makes Exxon Exxon? What makes Mobil Mobil? And what makes Shell Shell?

"It is just gas," Paglia said. "It's produced out of the earth. We refine that product. When you walk in, gas is gas."

Mark Cooper, head of research at the Consumer Federation of America, pointed out that there is a difference between brands of gasoline. And like everything connected with oil, it has to do with dollars and cents.

"A lot of advertising dollars," Cooper said. "I mean, it's a classic case of spending money on TV to convince the public that there's a difference."

Oil company ads, in other words, are an expensive competition for market share.

Some brands do add small amounts of detergent additives, but all gas is essentially the same because federal laws don't allow much variation.

It is an industry that made $180 billion in profits last year -- one gallon at a time. Our addiction has made oil the biggest business in the world.

Oil Addiction: The Refinery

Refineries are gigantic operations where crude oil becomes gasoline, and heating oil, and jet fuel and other products. Production volume at refineries can affect gasoline prices. Yet the last new refinery built in the United States went up 30 years ago.

"I think there have been issues around permits and people not wanting industry in their backyard," said Roland Kell, manager of Chevron's Pascagoula, Miss., oil refinery, one of the nation's largest.

But the not-in-my-backyard syndrome may not be the whole story. In the mid-1990s, more gasoline was being refined than was being used. Profits at the refinery level were at an all-time low.

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