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)

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.