Infographic: What’s Driving Gas Prices Today

By Matthew Wheeland - August 31, 2011
Infographic: What's Driving Gas Prices Today?

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Infographic: What's Driving Gas Prices Today?

Pump Pains: What’s Driving Gas Prices Today?

Every day a number of factors affect the fluctuating price of retail gas. We explore what those factors are and why they change.

Where the dollar goes

To understand what determines the price of retail gas, we have to look at what we’re paying for. As of June 2011, the average price for a gallon of regular gasoline was $3.68. Here’s how it breaks down.

What we pay for in a gallon of regular gasoline (as of June 2011):

  • Taxes: 11%
  • Distribution & Marketing: 11%
  • Refining: 12%
  • Crude oil: 66%
What determines the price at the pump
Cost of Crude Oil
Crude oil is the primary raw material used to produce gasoline. Because crude oil is a commodity traded on the global market, its price varies widely based on supply and demand.
Factors Affecting Supply
  • Political events and conflicts
  • Severe weather events
Factors Affecting Demand

  • Global economic development
  • Seasonal driving spikes
Refining Costs and Profits
Due to different gasoline formulations required in different states, the price to refine gasoline varies widely by region. Additionally, the cost of gas can be affected by the cost of the other ingredients added into it, such as ethanol. There are currently 18 different formulations of gasoline mandated for different regions.
Distribution and Marketing Costs
The cost to transport and distribute refined gasoline also affects the price at the pump. In some places, these costs can be more significant.
Price of a gallon of gas:
  • Gulf Coast (near the oil-producing Gulf of Mexico): $3.558
  • New England: $3.82
Taxes
Different counties and cities tax gasoline differently, and in some places taxes can make up a significant portion of overall price. However, state and federal taxes have increased significantly over time. Percentage taxed on a gallon of gas:
  • 1950: 1.5%
  • 2011: 20%
To a lesser extent, the profits and losses of refiners, marketers, distributors, and retail gas station owners affect pump prices as well.
Freed from the Pump
Don’t want to pay for gas? Try an electric car. Don’t want to pay to charge it? Try going solar, too. Even a small home solar system (1 to 2 kW) is enough to generate up to 15,000 miles worth of free power for an electric car.
  • Electric car powered by leased solar: $1,200 per year to run.
  • Electric car powered by purchased solar: $0 per year to run.
  • Gas-powered vehicle: $2,131 per year to run.
Sources: US Energy Information Association, Investopedia.com, ThePriceOfFuel.com, CBS News

What’s ?

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