Stephen said:
Once oil is refined into gasoline (aka petrol), it is shipped to filling
stations nearly exclusively via rail and truck tankers, at least in the US.
Gasoline, one of the main products refined from crude oil, accounts for
just about 16 percent of the energy consumed in the United States. The
primary use for gasoline is in automobiles and light trucks. Gasoline
also fuels boats, recreational vehicles, and various farm and other
equipment. While gasoline is produced year-round, extra volumes are made
in time for the summer driving season. Gasoline is delivered from oil
refineries mainly through pipelines to a massive distribution chain
serving 168,000 retail gasoline stations throughout the United States.1
There are three main grades of gasoline: regular, mid-grade, and
premium. Each grade has a different octane level. Price levels vary by
grade, but the price differential between grades is generally constant.
The cost to produce and deliver gasoline to consumers includes the cost
of crude oil to refiners, refinery processing costs, marketing and
distribution costs, and finally the retail station costs and taxes. The
prices paid by consumers at the pump reflect these costs, as well as the
profits (and sometimes losses) of refiners, marketers, distributors, and
retail station owners.
In 2002, the price of crude oil averaged $24.09 per barrel, and crude
oil accounted for about 43% of the cost of a gallon of regular grade
gasoline (Figure 1). In comparison, the average price for crude oil in
2001 was $22.95 per barrel, and it composed 38% of the cost of a gallon
of regular gasoline. The share of the retail price of regular grade
gasoline that crude oil costs represent varies somewhat over time and
among regions.
Federal, State, and local taxes are a large component of the retail
price of gasoline. Taxes (not including county and local taxes) account
for approximately 31 percent of the cost of a gallon of gasoline. Within
this national average, Federal excise taxes are 18.4 cents per gallon
and State excise taxes average about 20 cents per gallon.2Also, eleven
States levy additional State sales and other taxes, some of which are
applied to the Federal and State excise taxes. Additional local county
and city taxes can have a significant impact on the price of gasoline.
Refining costs and profits comprise about 13% of the retail price of
gasoline. This component varies from region to region due to the
different formulations required in different parts of the country.
Distribution, marketing and retail dealer costs and profits combined
make up 13% of the cost of a gallon of gasoline. From the refinery, most
gasoline is shipped first by pipeline to terminals near consuming areas,
then loaded into trucks for delivery to individual stations. Some retail
outlets are owned and operated by refiners, while others are independent
businesses that purchase gasoline for resale to the public. The price on
the pump reflects both the retailer's purchase cost for the product and
the other costs of operating the service station. It also reflects local
market conditions and factors, such as the desirability of the location
and the marketing strategy of the owner.