1. Crude oil: Around 55% of the price of gasoline at the pump comes from crude oil. The cost of crude oil can fluctuate based on global supply and demand, geopolitical factors, and other market forces.
2. Refining: Once crude oil is extracted from the ground, it needs to be refined into various products, including gasoline. Refining involves complex processes that require energy and transportation costs. The refining process can account for about 14% of the final gasoline price.
3. Distribution and marketing: Gasoline must be transported from refineries to distribution terminals and then to individual gas stations. Transportation and marketing activities, including storage, distribution infrastructure, branding, and marketing expenses, can add up to approximately 16% of the gasoline price.
4. Taxes: Federal, state, and local governments impose various taxes and fees on gasoline. These taxes can make up a significant portion of the final price, ranging from 12% to 22% in the United States, depending on the region.
5. Retail markup: Gas stations add a markup to the wholesale gasoline price to cover their operating costs, such as rent or mortgage, utilities, employee wages, and profit. This markup can vary depending on the gas station's location and competition but typically accounts for around 5% to 8% of the total gasoline price.
It's important to note that the actual breakdown of costs can vary based on specific locations and market conditions, so the percentages provided here are general approximations.
