What Goes Into the Price of Gas?

With gas prices increasing daily, I though I’d share with you some numbers from the Department of Energy regarding what goes into the price of gas as of April 2008. Here’s the breakdown:

73% - Crude oil
11% - Federal and state taxes
10% - Refining costs and profits
6% - Distribution and marketing

Not surprisingly, the cost of crude oil accounts for the majority of the cost of gas. For what it’s worth, the distribution and marketing category includes the cost of getting the gas to market plus and gas stations profits. These are pretty thin margins for gas station owners, though they’ve grown percentage-wise a bit over recent years.

Given the recent run up in oil prices, I though it would also be interesting to take a look at how things have changed in the past two years. For historical context, I’ve put together a graph of gas prices (right axis) along with a breakdown of the percentage contribution of the four different categories (left axis) for 2001-2008. All data are from the month of April during the year in question:

Note that the components are expressed in percentages, so a small percentage decrease could actually be an absolute increase (in terms of dollars) given the huge overall increase in price.

Source: DOE Gasoline Components History

Originally posted at fivecentnickel.com

Share and Enjoy!