Prices at the Pump Explained
Jane Van Ryan
Posted May 29, 2009
For Americans filling up at the pump, making sense of gasoline prices can be confusing. Here's a simple explanation: the price of crude oil is the main factor in determining the price of gasoline.
Since April 20, 2009, the price of crude oil has climbed 46 cents a gallon, and the price of gasoline has risen 41 cents a gallon.
For more information about the impact of crude oil on the price of gasoline, take a look at the dollar bill graphic below.
Also factored into the pump price are refining, marketing and transportation costs, and taxes. In fact, every time U.S. motorists pull up to the pump, they pay nearly 46 cents in taxes per gallon of gasoline.
Other factors --such as demand, gasoline inventory and import levels, and the effect of weather on production and refinery operations--also play a part in retail gasoline prices.
Occasionally, fluctuating pump prices bring accusations of price gouging, but numerous federal and state agencies have investigated the causes of price spikes for decades and consistently have found that the markets and the factors mentioned above are responsible for price fluctuations. America's oil and natural gas industry is monitored daily by U.S. Federal Trade Commission (FTC), other federal agencies and state Attorneys-General frequently conduct investigations.
Oil and natural gas earnings are in line with the average of other major U.S. manufacturing industries. In the first quarter of 2009, oil and natural gas earnings averaged 5.7 cents per dollar of sales as compared with 6.0 cents per dollar for U.S. manufacturing--excluding the financially challenged auto industry.
About The Author
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