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<br />fl~i'j'1."J <br />;) ~':' .~........ ,J <br /> <br />4-1 <br /> <br /> <br />SECTION 4.0 <br />PETROLEUM AND NATURAL GAS PRODUCT <br />PRICE PROJECTIONS <br /> <br />Price projections were developed for refined petroleum and processed <br />natural gas products. The projections were developed using constant <br />dollar processor and dealer markups then currently representative of <br />markups for commodities in the six High Plains states.1 In two instances-- <br />gasoline and diesel at pump prices--the markup was assumed to include <br />federal and state excise taxes. <br />The decision to use a constant dollar markup for processor and <br />dealer costs was based on two principal considerations. First, the major <br />cost incurred by refiners, processors, and dealers, aside from product <br />feedstock, is for expansion and replacement of capital plant; major capital <br />investments are required for pipeline, refinery, storage, and marketing <br />facilities. Second, it was assumed that capital plant costs would not <br />experience significant long-term real price changes, since the technologies <br />involved are well developed. <br />Table 4-1 summarizes the assumed processor and dealer markups and <br />the resultant expected price projections for refined petroleum products <br />and processed natural gas products. Tables 4-2 and 4-3 present the <br />high and low band projections, respectively. They were developed based <br />on the high and Imy band primary energy commodity price projections. <br /> <br />4.1 REFERENCES <br />1. "StatistiC$," Oil & Gas Journal, March 10, 1980, p. 164. <br />