Who Decides US Gas Prices?

One of the items on the mile long list of things to blame on the U.S. President when his approval ratings fall is price of gas. Obviously these people do not know who is actually responsible for the rising gas prices. According to the U.S. Energy Information Administration (EIA) the majority of that blame falls on falls on the price of crude oil. Because you can’t make gasoline without crude oil. Well technically you can, but that’s a horse of a differ t color. What decides the price of crude oil? That would be supply and demand, isn’t that how most things are priced? And the demand is pretty high. It has dropped about 6% from 2007 to 2013 which is a good thing, but our country still used 369.51 million gallons a day last year and the effects of crude oil pricing increased by by 12 percentage points in that same time. Throw in factors that raise the demand or cut off supply like outages, war, conflict in the major oil export countries, holiday travel, and special gas blends and the prices roller coaster.Crude oil prices made up 68% of the average $3.51 per gallon last year.

What are the other slices on the gasoline pie? Federal and state taxes made up 12% in 2013, decreasing by 7 percentage points since 2007. 11% is refining cost and profits, which are also down from 2007 by 2 percentage points. Bringing up the rear is distribution and marketing at 9%, also coming down 2 point since 2007. Does anybody else see something off about this gasoline pie? Is it just me? So in a span of 6 years, U.S. crude oil demands drop 6%, yet crude oil’s slice is up and everyone else’s went down? Oh, and the price of gas in 2007 was an average of $2.45, so that is up too. Can anybody say inflation? The times, they are a changin’.


EIA: Gas Explained, Factors Effecting Gasoline Prices


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