|
September | October 2005 |
||||
AutoTalk  |
||||
|
Where your gas dollar goes Few topics provoke m among American Four factors determine the number on your local gas station's signboard. Here's a rough average breakdown of every dollar Americans spend on gas: • 48 cents for the crude oil. • 17 cents for the cost of refining it into gas. • 12 cents for distribution and marketing. Of this, one to three cents goes to your local retailer. • 23 cents for federal, state and local taxes. Just under half of each barrel of crude oil is destined to become gasoline. The rest will be used to make diesel, jet fuel and a host of other products, from asphalt to industrial lubricants. The price of a barrel is tied to demand in the world market, so each country's changing needs affect us all. Our own increasing demand has a significant impact on that market. The U.S. is the world's largest oil consumer, accounting for 25% of world oil use and 43% of gasoline, though it contains only 5% of the world's population. Our gasoline use has risen sharply since 1980—mostly due to increasing numbers of larger, less fuel-efficient vehicles. Over the same period of time, the number of refineries in the U.S. has decreased. No new plants have been built since the 1970s, and many have been shut down. The remaining ones are already operating at the limits of their capacity, so production cannot be expanded to meet growing demand. To make up the deficit, an increasing amount of our gasoline is imported from refineries in Canada, Europe and the Virgin Islands. Supply and demand drive seasonal changes in gas pricing: We drive more in summer. Summer-grade gasoline (which has a lower evaporation rate) also costs more to produce than winter-grade. Prices differ from one town to another due to transport costs, amount of competition, and the different quality standards that states set for their gasoline. Tax rates also vary considerably. And oil companies charge different wholesale prices to each retail gas station, based on a practice called “zone pricing.” Nationally the U.S. has by far the lowest gas taxes in the developed world, around 25–50 cents per gallon; in Colorado it's 40 cents. In other countries, taxes range from the equivalent of $1 per gallon in Canada to $4.25 in the U.K. Once taxes are excluded, the cost of a gallon varies little from one country to another. The U.S. Government Accountability Office has produced a 61-page booklet to explain in detail where your gas dollar goes, and why. Copies can be downloaded free from AAA's website, www.aaa.com/fuelgauge.
|
||||
Copyright © 2005 AAA Colorado. All Rights Reserved. Privacy |
consumers—or more confusion—than the price of gas. What are you paying for when you buy a gallon of gas? And why does it change so often?