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    Question ID:   1596         Current Version: 1
Question: What are the components of the retail price of gasoline?
Category: Automotive & Transportation > Other
Keywords: component, gasoline, cost, tax, refine, distribution, marketing, gas, price
Type: what
Rating:(0 ratings)    Views: 652    Discussions: 0   In Watch Lists: 1  

 
    Answer:
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.

In 2002, the price of crude oil averaged $24.09 per barrel, and crude oil accounted for about 43% of the cost of a gallon of regular grade gasoline (Figure below). In comparison, the average price for crude oil in 2001 was $22.95 per barrel, and it composed 38% 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.

 

 

 

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 31 percent of the cost of a gallon of gasoline. Within this national average, Federal excise taxes are 18.4 cents per gallon and State excise taxes average about 20 cents per gallon. Also, eleven States levy additional State sales and other taxes, some of which are applied to the Federal and State excise taxes. Additional local county and city taxes can have a significant impact on the price of gasoline.

Refining costs and profits comprise about 13% of the retail price of gasoline. This component varies from region to region due to the different formulations required in different parts of the country.

Distribution, marketing and retail dealer costs and profits combined make up 13% of the cost of a gallon of gasoline. From the refinery, most gasoline is shipped first by pipeline to terminals near consuming areas, then loaded into trucks for delivery to individual stations. Some retail outlets are owned and operated by refiners, while others are independent businesses that purchase gasoline for resale to the public. The price on the pump reflects both the retailer's purchase cost for the product and the other costs of operating the service station. It also reflects local market conditions and factors, such as the desirability of the location and the marketing strategy of the owner.

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