Crude Oil and Taxes are Primary Drivers
Crude and Taxes: 7 ½ Times the Cost of Refining
America’s refiners manufacture safe, reliable, and clean transportation fuels that literally keep our nation moving and sustain our economy. According to the U.S. Energy Information Administration’s (USEIA’s) latest data, the average price of a gallon of gasoline and diesel was $3.57 and $3.93, respectively.
The largest cost components of a gallon of gas or diesel are crude oil and the 18.4 cents (gasoline) and 24.4 cents/gallon (diesel) federal and state taxes (e.g., New York’s 70 and 75 cents/gallon of gas or diesel) and sometimes, local taxes.
USEIA reports crude oil presently accounts for 65% of the cost of a gallon of gas:
Refining is a complex and sophisticated manufacturing process. It requires significant human and capital investments, and must meet increasingly expensive environmental compliance processes required by our government. As regulators change the energy, carbon, and chemical content of transportation fuels (e.g., Tier 3, RFS, LCFS) fuels manufacturing and distribution inevitably becomes more complex (e.g., E15) and costly to consumers.
Despite new government regulations and mandates, fuel manufacturing’s share of the price at the pump is still small. During the last five years crude oil and taxes together drove 81% of the average retail price of gasoline; refining was just 10% of this cost.