Why does gas cost so much?

Several factors go into determining the price of a gallon of gasoline. Typically, the formula is rather elementary and it comes down to supply and demand. Crude Oil + Refining Process + Retail Sales/Distribution + Taxes = Gas Price. However, these elements are not represented in equal proportion. Below are the segments.

Crude oil

• Finding the crude oil
• Recovering the crude oil from the ground
• The Transportation of the crude oil to the refinery
• Maintaining a reserve of crude oil
• R&D of new drilling techniques and equipment
• Researching new places to drill
• Wholesaler Profits

Refining Process

• Blending the gasoline to government standards
• Transporting the gasoline to fuel pumps around the country
• Profits for refining and transporting

Retail Sales & Distribution

• Operational costs
• Marketing costs
• Profit from sales and distribution

Taxes

• Federal Taxes
• State Taxes

Other topics that may effect oil prices

• Oil Speculation – Article
• Opec – Article