This article was published in Scientific American’s former blog network and reflects the views of the author, not necessarily those of Scientific American
In April 2012, the average price at the pump for a gallon of gasoline in the United States was $3.90. Where does this price come from?
According to the Energy Information Administration, this $3.90/gal can be roughly broken down into four buckets:
1. The price of crude oil has the largest impact on the final cost of gasoline in the United States. In April, U.S. refineries paid an average of $108 per barrel (42 gallons) of crude oil. This includes the cost to ship crude oil from production facilities to refineries. (66% of final price ~ $2.58)
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2. The cost of refining this crude oil into gasoline (other petroleum products are also produced in the refining process) accounts for 15% of the final price of a gallon of gasoline. This includes profits for the refining companies. (15% of final price ~ $0.59)
3. The next 8% of the price at the pump comes from the distribution, marketing, and retail portion of the supply chain. (8% of final price ~ $0.32)
4. The remaining 11% of the price at the pump comes from federal and state excise taxes. In April 2012, these taxes averaged $0.18/gallon (federal) and $0.23/gallon (state). (11% of final price ~ $0.41)
Photo Credit:
1. Gas pump handle graphic from this blog via Creative Commons.