Average gasoline prices have risen by 17 cents in July. And, given yesterday’s fire at a Chevron refinery in California, prices will rise even further. Most will blame “big oil” (don’t you just love it that “someone” must be blamed for everything in this country). Before you do so, read on.
Crude oil costs make up about 76% of the cost of gasoline, according to U.S. Energy Information Administration (EIA). Thus $2.66 of a $3.50 gallon of gasoline is set before the oil is even refined.
Where does the rest of your money go?
Not to “big oil”.
As of January, 2012, the EIA found that refining was responsible for 6% of the cost of gasoline.
Yes, “big oil” refines the oil, but that 6% doesn’t go into big oil’s pocket, it goes to pay for the cost of running the refineries, and the salaries of those who work there.
Another 6% goes to distribution and marketing.
That portion of the cost includes the shipping and transportation of the gasoline, a markup to cover retailers’ expenses and any advertising created to appeal to customers.
Retailers’ expenses pay for your local gas station, its employees, its mortgage, and its property taxes. Not to “big oil”.
The remaining 12%–or almost 50 cents per gallon today–goes directly to federal, state and local governments in an array of sales and excise taxes. The federal tax is 18.4 cents on every gallon of gasoline sold in America. State gas-tax rates vary from a low of eight cents per gallon in Alaska to a jarring 49 cents per gallon in New York. Other states where it is steep to fill up include California and Connecticut–each with 48.6 cent-per-gallon gas taxes..
And “evil” big oil.
Exxon, for example, made only seven cents per gallon of gasoline in 2011.
So, the next time you fill up your tank in Connecticut, say, remember that 67 cents of the cost of every gallon goes to your state and federal government in taxes, while only 7 cents of the cost of every gallon goes to “big oil”.