Gasoline is one of the major fuels consumed in the United States
and the main product refined from crude oil. Consumption
in 2007 was about 142 billion gallons, an average about 390
million gallons per day and the equivalent of about 61% of
all the energy used for transportation, 44% of all petroleum
consumption, and 17% of total U.S. energy consumption.
About 47 barrels of gasoline are produced in U.S. refineries
from every 100 barrels of oil refined to make numerous
petroleum products. Most gasoline is used in cars and light
trucks. It also fuels boats, recreational vehicles, and farm,
construction and landscaping equipment. While gasoline is
produced year-round, extra volumes are made and imported
to meet higher demand in the summer. Gasoline is delivered
from oil refineries mainly through pipelines to an extensive
distribution chain serving about 167,500 retail gasoline
stations in the United States.1 There are three main grades of
gasoline that are based on octane levels: regular, mid-grade,
and premium. Premium grade is the most expensive; the price
difference between grades is generally constant at about ten
cents per gallon.
1National Petroleum News, 2007 Industry Scorecard.
What are the components of the
retail price of gasoline?
The cost to produce and sell gasoline to consumers includes
the cost of crude oil to refiners, the costs to refine, market
and distribute the gasoline, and finally the retail station costs
and taxes. Retail pump prices reflect these costs, as well as
the profits (and sometimes losses) of refiners, marketers,
distributors and retail station owners.
The cost of crude oil as a share of the retail price varies over
time and among regions of the country. In 2007, the price
of crude oil averaged about $68 per barrel and accounted for
about 58% of the national average retail price of a gallon of
regular grade gasoline (Figure 1). In comparison, in 2005
the average crude oil price was $50 per barrel and the crude
oil cost was 53% of the retail price. Fr