Gas Prices

A Primer on Gas Prices

In 2004, the price of crude oil averaged $36.97 per barrel, and crude oil accounted for about 47% of the cost of a gallon of regular grade gasoline (Figure 1). In comparison, the average price for crude oil in 2003 was $28.50 per barrel, and it composed 44% of the cost of a gallon of regular gasoline. The share of the retail price of regular grade gasoline that crude oil costs represent varies somewhat over time and among regions.

The cost to produce and deliver gasoline to consumers includes the cost of crude oil to refiners, refinery processing costs, marketing and distribution costs, and finally the retail station costs and taxes. The prices paid by consumers at the pump reflect these costs, as well as the profits (and sometimes losses) of refiners, marketers, distributors, and retail station owners.

Federal, State, and local taxes are a large component of the retail price of gasoline. Taxes (not including county and local taxes) account for approximately 23 percent of the cost of a gallon of gasoline.

Refining costs and profits comprise about 18% of the retail price of gasoline.

Distribution, marketing and retail dealer costs and profits combined make up 12% of the cost of a gallon of gasoline.

Instead of joining the lynch mob we need to educate ourselves and look for the real reasons the price of gas is so high. Some of those things we can't do anything about and some we can. More refineries, less taxes and opening up drilling in the U.S. are things we can control, one or a combination of which will help.

"Big Oil" is not the problem. Our biggest problem is the lynch mob mentality and the people inciting it. More taxes will not help. More taxes are not the answer. More taxes will hurt. More taxes for oil companies means higher prices for you. It all gets passed on to you. Just say no to more taxes.

Here's a great page about oil: Some interesting oil industry statistics