Issues

Transportation Fuel Costs

Crude Oil and Taxes are Primary Drivers

The domestic refining sector provides safe, reliable, and clean transportation fuels that literally keep America moving and sustain our economy.  According to the U.S. Energy Information Administration’s (EIA) most recently-available monthly data, the average price of a gallon of gasoline and diesel in October of 2012 was $3.75 and $4.09, respectively. Since 1973, the largest cost component of a gallon of gasoline and diesel has been crude oil, with a significant share comprised of federal and state taxes (e.g., as high as New York 70 cents per gallon of gasoline, Connecticut 81 cents per gallon of diesel), and, where applicable, local taxes.

According to the EIA, crude oil accounts for 64% of the cost of a gallon of gas, on average:

 

 

Refining is a necessarily complex and sophisticated manufacturing process. It already requires intensive human and capital investments, and increasingly expensive environmental compliance processes. As the energy, carbon, and chemical content of transportation fuels is further engineered to accommodate multiple government mandates, the fuels manufacturing process will inevitably involve greater complexity, and costs, which ultimately reach consumers.

Despite the growing complexity and costs resulting from government regulations and mandates, fuel manufacturing’s share of the actual price at the pump is relatively low. Over the last five years, average refining cost have accounted for 9.7% of the retail price of gas, while crude oil and taxes were together over 80%.

See: http://www.eia.gov/petroleum/gasdiesel/gaspump_hist.cfm